Correlation Between Bitcoin and Vertical Aerospace
Can any of the company-specific risk be diversified away by investing in both Bitcoin and Vertical Aerospace 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 Vertical Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin and Vertical Aerospace, you can compare the effects of market volatilities on Bitcoin and Vertical Aerospace 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 Vertical Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin and Vertical Aerospace.
Diversification Opportunities for Bitcoin and Vertical Aerospace
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bitcoin and Vertical is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Vertical Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vertical Aerospace 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 Vertical Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vertical Aerospace has no effect on the direction of Bitcoin i.e., Bitcoin and Vertical Aerospace go up and down completely randomly.
Pair Corralation between Bitcoin and Vertical Aerospace
Assuming the 90 days trading horizon Bitcoin is expected to generate 0.27 times more return on investment than Vertical Aerospace. However, Bitcoin is 3.77 times less risky than Vertical Aerospace. It trades about 0.2 of its potential returns per unit of risk. Vertical Aerospace is currently generating about 0.01 per unit of risk. If you would invest 5,797,552 in Bitcoin on November 2, 2024 and sell it today you would earn a total of 4,687,948 from holding Bitcoin or generate 80.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.26% |
| Values | Daily Returns |
Bitcoin vs. Vertical Aerospace
Performance |
| Timeline |
| Bitcoin |
| Vertical Aerospace |
Bitcoin and Vertical Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin and Vertical Aerospace
The main advantage of trading using opposite Bitcoin and Vertical Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin position performs unexpectedly, Vertical Aerospace 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 Vertical Aerospace will offset losses from the drop in Vertical Aerospace's long position.The idea behind Bitcoin and Vertical Aerospace 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.| Vertical Aerospace vs. Archer Aviation | Vertical Aerospace vs. Ehang Holdings | Vertical Aerospace vs. Rocket Lab USA | Vertical Aerospace vs. Lilium NV |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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