Correlation Between Bitcoin and James Hardie
Can any of the company-specific risk be diversified away by investing in both Bitcoin and James Hardie 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 James Hardie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin and James Hardie Industries, you can compare the effects of market volatilities on Bitcoin and James Hardie 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 James Hardie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin and James Hardie.
Diversification Opportunities for Bitcoin and James Hardie
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bitcoin and James is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and James Hardie Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James Hardie Industries 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 James Hardie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James Hardie Industries has no effect on the direction of Bitcoin i.e., Bitcoin and James Hardie go up and down completely randomly.
Pair Corralation between Bitcoin and James Hardie
Assuming the 90 days trading horizon Bitcoin is expected to generate 1.72 times less return on investment than James Hardie. In addition to that, Bitcoin is 1.08 times more volatile than James Hardie Industries. It trades about 0.17 of its total potential returns per unit of risk. James Hardie Industries is currently generating about 0.31 per unit of volatility. If you would invest 3,066 in James Hardie Industries on November 2, 2024 and sell it today you would earn a total of 343.00 from holding James Hardie Industries or generate 11.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Bitcoin vs. James Hardie Industries
Performance |
| Timeline |
| Bitcoin |
| James Hardie Industries |
Bitcoin and James Hardie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin and James Hardie
The main advantage of trading using opposite Bitcoin and James Hardie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin position performs unexpectedly, James Hardie 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 James Hardie will offset losses from the drop in James Hardie's long position.The idea behind Bitcoin and James Hardie Industries 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.| James Hardie vs. Loma Negra Compania | James Hardie vs. Summit Materials | James Hardie vs. United States Lime | James Hardie vs. Eagle Materials |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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