Correlation Between Bitcoin and SPROUTS FARMERS
Can any of the company-specific risk be diversified away by investing in both Bitcoin and SPROUTS FARMERS 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 and SPROUTS FARMERS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin and SPROUTS FARMERS MKT, you can compare the effects of market volatilities on Bitcoin and SPROUTS FARMERS 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 with a short position of SPROUTS FARMERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin and SPROUTS FARMERS.
Diversification Opportunities for Bitcoin and SPROUTS FARMERS
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bitcoin and SPROUTS is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and SPROUTS FARMERS MKT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPROUTS FARMERS MKT and Bitcoin 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 are associated (or correlated) with SPROUTS FARMERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPROUTS FARMERS MKT has no effect on the direction of Bitcoin i.e., Bitcoin and SPROUTS FARMERS go up and down completely randomly.
Pair Corralation between Bitcoin and SPROUTS FARMERS
Assuming the 90 days trading horizon Bitcoin is expected to generate 1.61 times less return on investment than SPROUTS FARMERS. In addition to that, Bitcoin is 1.69 times more volatile than SPROUTS FARMERS MKT. It trades about 0.08 of its total potential returns per unit of risk. SPROUTS FARMERS MKT is currently generating about 0.22 per unit of volatility. If you would invest 3,575 in SPROUTS FARMERS MKT on October 16, 2024 and sell it today you would earn a total of 9,925 from holding SPROUTS FARMERS MKT or generate 277.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 48.02% |
| Values | Daily Returns |
Bitcoin vs. SPROUTS FARMERS MKT
Performance |
| Timeline |
| Bitcoin |
| SPROUTS FARMERS MKT |
Bitcoin and SPROUTS FARMERS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin and SPROUTS FARMERS
The main advantage of trading using opposite Bitcoin and SPROUTS FARMERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin position performs unexpectedly, SPROUTS FARMERS 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 SPROUTS FARMERS will offset losses from the drop in SPROUTS FARMERS's long position.The idea behind Bitcoin and SPROUTS FARMERS MKT pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| SPROUTS FARMERS vs. Apple Inc | SPROUTS FARMERS vs. Apple Inc | SPROUTS FARMERS vs. Apple Inc | SPROUTS FARMERS vs. Apple Inc |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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