Correlation Between Bitcoin Cash and Horizen
Can any of the company-specific risk be diversified away by investing in both Bitcoin Cash and Horizen 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 Horizen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin Cash and Horizen, you can compare the effects of market volatilities on Bitcoin Cash and Horizen 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 Horizen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin Cash and Horizen.
Diversification Opportunities for Bitcoin Cash and Horizen
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bitcoin and Horizen is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Cash and Horizen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizen 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 Horizen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizen has no effect on the direction of Bitcoin Cash i.e., Bitcoin Cash and Horizen go up and down completely randomly.
Pair Corralation between Bitcoin Cash and Horizen
Assuming the 90 days trading horizon Bitcoin Cash is expected to generate 1.28 times more return on investment than Horizen. However, Bitcoin Cash is 1.28 times more volatile than Horizen. It trades about 0.1 of its potential returns per unit of risk. Horizen is currently generating about 0.05 per unit of risk. If you would invest 10,916 in Bitcoin Cash on August 30, 2024 and sell it today you would earn a total of 40,532 from holding Bitcoin Cash or generate 371.31% 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. Horizen
Performance |
| Timeline |
| Bitcoin Cash |
| Horizen |
Bitcoin Cash and Horizen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin Cash and Horizen
The main advantage of trading using opposite Bitcoin Cash and Horizen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin Cash position performs unexpectedly, Horizen 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 Horizen will offset losses from the drop in Horizen's long position.| Bitcoin Cash vs. Bitcoin Gold | Bitcoin Cash vs. Bitcoin SV | Bitcoin Cash vs. Staked Ether | Bitcoin Cash 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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