Correlation Between Bitcoin SV and Ethereum
Can any of the company-specific risk be diversified away by investing in both Bitcoin SV and Ethereum 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 SV and Ethereum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin SV and Ethereum, you can compare the effects of market volatilities on Bitcoin SV and Ethereum 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 SV with a short position of Ethereum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin SV and Ethereum.
Diversification Opportunities for Bitcoin SV and Ethereum
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bitcoin and Ethereum is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin SV and Ethereum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ethereum and Bitcoin SV 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 SV are associated (or correlated) with Ethereum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ethereum has no effect on the direction of Bitcoin SV i.e., Bitcoin SV and Ethereum go up and down completely randomly.
Pair Corralation between Bitcoin SV and Ethereum
Assuming the 90 days trading horizon Bitcoin SV is expected to generate 1.17 times less return on investment than Ethereum. But when comparing it to its historical volatility, Bitcoin SV is 1.01 times less risky than Ethereum. It trades about 0.33 of its potential returns per unit of risk. Ethereum is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 251,504 in Ethereum on August 31, 2024 and sell it today you would earn a total of 104,651 from holding Ethereum or generate 41.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bitcoin SV vs. Ethereum
Performance |
| Timeline |
| Bitcoin SV |
| Ethereum |
Bitcoin SV and Ethereum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin SV and Ethereum
The main advantage of trading using opposite Bitcoin SV and Ethereum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin SV position performs unexpectedly, Ethereum 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 will offset losses from the drop in Ethereum's long position.| Bitcoin SV vs. Bitcoin Gold | Bitcoin SV vs. Bitcoin Cash | Bitcoin SV vs. Staked Ether | Bitcoin SV 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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