Correlation Between Bitfarms and DeFi Technologies
Can any of the company-specific risk be diversified away by investing in both Bitfarms and DeFi Technologies 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 Bitfarms and DeFi Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitfarms and DeFi Technologies, you can compare the effects of market volatilities on Bitfarms and DeFi Technologies 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 Bitfarms with a short position of DeFi Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitfarms and DeFi Technologies.
Diversification Opportunities for Bitfarms and DeFi Technologies
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bitfarms and DeFi is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bitfarms and DeFi Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DeFi Technologies and Bitfarms 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 Bitfarms are associated (or correlated) with DeFi Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DeFi Technologies has no effect on the direction of Bitfarms i.e., Bitfarms and DeFi Technologies go up and down completely randomly.
Pair Corralation between Bitfarms and DeFi Technologies
Given the investment horizon of 90 days Bitfarms is expected to generate 2.45 times less return on investment than DeFi Technologies. But when comparing it to its historical volatility, Bitfarms is 1.34 times less risky than DeFi Technologies. It trades about 0.09 of its potential returns per unit of risk. DeFi Technologies is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 274.00 in DeFi Technologies on October 22, 2024 and sell it today you would earn a total of 40.00 from holding DeFi Technologies or generate 14.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Bitfarms vs. DeFi Technologies
Performance |
| Timeline |
| Bitfarms |
| DeFi Technologies |
Bitfarms and DeFi Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitfarms and DeFi Technologies
The main advantage of trading using opposite Bitfarms and DeFi Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitfarms position performs unexpectedly, DeFi Technologies 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 DeFi Technologies will offset losses from the drop in DeFi Technologies' long position.| Bitfarms vs. HIVE Blockchain Technologies | Bitfarms vs. CleanSpark | Bitfarms vs. Marathon Digital Holdings | Bitfarms vs. Riot Blockchain |
| DeFi Technologies vs. Argo Blockchain PLC | DeFi Technologies vs. DigiMax Global | DeFi Technologies vs. Galaxy Digital Holdings | DeFi Technologies vs. BIG Blockchain Intelligence |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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