Correlation Between Bitcoin and Hartford Financial
Can any of the company-specific risk be diversified away by investing in both Bitcoin and Hartford 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 Bitcoin and Hartford Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin and The Hartford Financial, you can compare the effects of market volatilities on Bitcoin and Hartford 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 Bitcoin with a short position of Hartford Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin and Hartford Financial.
Diversification Opportunities for Bitcoin and Hartford Financial
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bitcoin and Hartford is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and The Hartford Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hartford Financial 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 Hartford Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Hartford Financial has no effect on the direction of Bitcoin i.e., Bitcoin and Hartford Financial go up and down completely randomly.
Pair Corralation between Bitcoin and Hartford Financial
Assuming the 90 days trading horizon Bitcoin is expected to generate 7.87 times more return on investment than Hartford Financial. However, Bitcoin is 7.87 times more volatile than The Hartford Financial. It trades about 0.08 of its potential returns per unit of risk. The Hartford Financial is currently generating about 0.07 per unit of risk. If you would invest 2,278,992 in Bitcoin on October 11, 2024 and sell it today you would earn a total of 6,981,707 from holding Bitcoin or generate 306.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 60.69% |
| Values | Daily Returns |
Bitcoin vs. The Hartford Financial
Performance |
| Timeline |
| Bitcoin |
| The Hartford Financial |
Bitcoin and Hartford Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin and Hartford Financial
The main advantage of trading using opposite Bitcoin and Hartford Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin position performs unexpectedly, Hartford 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 Hartford Financial will offset losses from the drop in Hartford Financial's long position.The idea behind Bitcoin and The Hartford Financial 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.| Hartford Financial vs. Taiwan Semiconductor Manufacturing | Hartford Financial vs. Apple Inc | Hartford Financial vs. Alibaba Group Holding | Hartford Financial vs. Banco Santander Chile |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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