Correlation Between Bitcoin Cash and Ethereum Name
Can any of the company-specific risk be diversified away by investing in both Bitcoin Cash and Ethereum Name at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bitcoin Cash and Ethereum Name into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin Cash and Ethereum Name Service, you can compare the effects of market volatilities on Bitcoin Cash and Ethereum Name and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bitcoin Cash with a short position of Ethereum Name. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin Cash and Ethereum Name.
Diversification Opportunities for Bitcoin Cash and Ethereum Name
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bitcoin and Ethereum is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Cash and Ethereum Name Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ethereum Name Service and Bitcoin Cash is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bitcoin Cash are associated (or correlated) with Ethereum Name. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ethereum Name Service has no effect on the direction of Bitcoin Cash i.e., Bitcoin Cash and Ethereum Name go up and down completely randomly.
Pair Corralation between Bitcoin Cash and Ethereum Name
Assuming the 90 days trading horizon Bitcoin Cash is expected to generate 1.85 times less return on investment than Ethereum Name. But when comparing it to its historical volatility, Bitcoin Cash is 2.08 times less risky than Ethereum Name. It trades about 0.22 of its potential returns per unit of risk. Ethereum Name Service is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,662 in Ethereum Name Service on September 2, 2024 and sell it today you would earn a total of 2,373 from holding Ethereum Name Service or generate 142.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bitcoin Cash vs. Ethereum Name Service
Performance |
| Timeline |
| Bitcoin Cash |
| Ethereum Name Service |
Bitcoin Cash and Ethereum Name Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin Cash and Ethereum Name
The main advantage of trading using opposite Bitcoin Cash and Ethereum Name positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin Cash position performs unexpectedly, Ethereum Name can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ethereum Name will offset losses from the drop in Ethereum Name's long position.| Bitcoin Cash vs. Bitcoin Gold | Bitcoin Cash vs. Bitcoin SV | Bitcoin Cash vs. Staked Ether | Bitcoin Cash vs. EigenLayer |
| Ethereum Name vs. Ethereum Classic | Ethereum Name vs. Ethereum PoW | Ethereum Name vs. Staked Ether | Ethereum Name vs. EigenLayer |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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