Correlation Between Bitcoin and Creditcoin
Can any of the company-specific risk be diversified away by investing in both Bitcoin and Creditcoin 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 Creditcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin and Creditcoin, you can compare the effects of market volatilities on Bitcoin and Creditcoin 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 Creditcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin and Creditcoin.
Diversification Opportunities for Bitcoin and Creditcoin
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bitcoin and Creditcoin is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Creditcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creditcoin 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 Creditcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creditcoin has no effect on the direction of Bitcoin i.e., Bitcoin and Creditcoin go up and down completely randomly.
Pair Corralation between Bitcoin and Creditcoin
Assuming the 90 days trading horizon Bitcoin is expected to generate 1.13 times less return on investment than Creditcoin. But when comparing it to its historical volatility, Bitcoin is 2.09 times less risky than Creditcoin. It trades about 0.1 of its potential returns per unit of risk. Creditcoin is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 40.00 in Creditcoin on August 27, 2024 and sell it today you would earn a total of 48.00 from holding Creditcoin or generate 120.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bitcoin vs. Creditcoin
Performance |
| Timeline |
| Bitcoin |
| Creditcoin |
Bitcoin and Creditcoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin and Creditcoin
The main advantage of trading using opposite Bitcoin and Creditcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin position performs unexpectedly, Creditcoin 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 Creditcoin will offset losses from the drop in Creditcoin's long position.The idea behind Bitcoin and Creditcoin 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.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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |