Correlation Between Bitcoin and Capricorn Metals
Can any of the company-specific risk be diversified away by investing in both Bitcoin and Capricorn Metals 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 Capricorn Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin and Capricorn Metals, you can compare the effects of market volatilities on Bitcoin and Capricorn Metals 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 Capricorn Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin and Capricorn Metals.
Diversification Opportunities for Bitcoin and Capricorn Metals
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bitcoin and Capricorn is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Capricorn Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capricorn Metals 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 Capricorn Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capricorn Metals has no effect on the direction of Bitcoin i.e., Bitcoin and Capricorn Metals go up and down completely randomly.
Pair Corralation between Bitcoin and Capricorn Metals
Assuming the 90 days trading horizon Bitcoin is expected to generate 1.21 times less return on investment than Capricorn Metals. In addition to that, Bitcoin is 1.22 times more volatile than Capricorn Metals. It trades about 0.15 of its total potential returns per unit of risk. Capricorn Metals is currently generating about 0.22 per unit of volatility. If you would invest 666.00 in Capricorn Metals on October 20, 2024 and sell it today you would earn a total of 51.00 from holding Capricorn Metals or generate 7.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Bitcoin vs. Capricorn Metals
Performance |
| Timeline |
| Bitcoin |
| Capricorn Metals |
Bitcoin and Capricorn Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin and Capricorn Metals
The main advantage of trading using opposite Bitcoin and Capricorn Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin position performs unexpectedly, Capricorn Metals 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 Capricorn Metals will offset losses from the drop in Capricorn Metals' long position.The idea behind Bitcoin and Capricorn Metals 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.| Capricorn Metals vs. Northern Star Resources | Capricorn Metals vs. Evolution Mining | Capricorn Metals vs. Bluescope Steel | Capricorn Metals vs. De Grey Mining |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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