Correlation Between Bit Digital and LPL Financial
Can any of the company-specific risk be diversified away by investing in both Bit Digital and LPL Financial 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 Bit Digital and LPL Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bit Digital and LPL Financial Holdings, you can compare the effects of market volatilities on Bit Digital and LPL Financial 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 Bit Digital with a short position of LPL Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bit Digital and LPL Financial.
Diversification Opportunities for Bit Digital and LPL Financial
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bit and LPL is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Bit Digital and LPL Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPL Financial Holdings and Bit Digital 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 Bit Digital are associated (or correlated) with LPL Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPL Financial Holdings has no effect on the direction of Bit Digital i.e., Bit Digital and LPL Financial go up and down completely randomly.
Pair Corralation between Bit Digital and LPL Financial
Given the investment horizon of 90 days Bit Digital is expected to generate 2.1 times less return on investment than LPL Financial. In addition to that, Bit Digital is 3.38 times more volatile than LPL Financial Holdings. It trades about 0.04 of its total potential returns per unit of risk. LPL Financial Holdings is currently generating about 0.32 per unit of volatility. If you would invest 26,538 in LPL Financial Holdings on August 30, 2024 and sell it today you would earn a total of 6,034 from holding LPL Financial Holdings or generate 22.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bit Digital vs. LPL Financial Holdings
Performance |
| Timeline |
| Bit Digital |
| LPL Financial Holdings |
Bit Digital and LPL Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bit Digital and LPL Financial
The main advantage of trading using opposite Bit Digital and LPL Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bit Digital position performs unexpectedly, LPL Financial 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 LPL Financial will offset losses from the drop in LPL Financial's long position.| Bit Digital vs. Hut 8 Corp | Bit Digital vs. HIVE Blockchain Technologies | Bit Digital vs. CleanSpark | Bit Digital vs. Terawulf |
| LPL Financial vs. Tradeweb Markets | LPL Financial vs. Raymond James Financial | LPL Financial vs. PJT Partners | LPL Financial vs. Moelis Co |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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