Correlation Between Bitcoin Cash and Ethereum PoW
Can any of the company-specific risk be diversified away by investing in both Bitcoin Cash and Ethereum PoW 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 PoW 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 PoW, you can compare the effects of market volatilities on Bitcoin Cash and Ethereum PoW 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 PoW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin Cash and Ethereum PoW.
Diversification Opportunities for Bitcoin Cash and Ethereum PoW
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bitcoin and Ethereum is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Cash and Ethereum PoW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ethereum PoW 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 PoW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ethereum PoW has no effect on the direction of Bitcoin Cash i.e., Bitcoin Cash and Ethereum PoW go up and down completely randomly.
Pair Corralation between Bitcoin Cash and Ethereum PoW
Assuming the 90 days trading horizon Bitcoin Cash is expected to generate 0.68 times more return on investment than Ethereum PoW. However, Bitcoin Cash is 1.47 times less risky than Ethereum PoW. It trades about -0.01 of its potential returns per unit of risk. Ethereum PoW is currently generating about -0.02 per unit of risk. If you would invest 43,403 in Bitcoin Cash on November 24, 2024 and sell it today you would lose (12,110) from holding Bitcoin Cash or give up 27.9% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Bitcoin Cash vs. Ethereum PoW
Performance |
Timeline |
Bitcoin Cash |
Ethereum PoW |
Bitcoin Cash and Ethereum PoW Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bitcoin Cash and Ethereum PoW
The main advantage of trading using opposite Bitcoin Cash and Ethereum PoW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin Cash position performs unexpectedly, Ethereum PoW 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 PoW will offset losses from the drop in Ethereum PoW's long position.Bitcoin Cash vs. Bitcoin Gold | ||
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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