Correlation Between Bitcoin and Perrigo Company

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Can any of the company-specific risk be diversified away by investing in both Bitcoin and Perrigo Company 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 Perrigo Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin and Perrigo Company PLC, you can compare the effects of market volatilities on Bitcoin and Perrigo Company 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 Perrigo Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin and Perrigo Company.

Diversification Opportunities for Bitcoin and Perrigo Company

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between Bitcoin and Perrigo is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Perrigo Company PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perrigo Company 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 Perrigo Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perrigo Company has no effect on the direction of Bitcoin i.e., Bitcoin and Perrigo Company go up and down completely randomly.

Pair Corralation between Bitcoin and Perrigo Company

Assuming the 90 days trading horizon Bitcoin is expected to generate 1.56 times more return on investment than Perrigo Company. However, Bitcoin is 1.56 times more volatile than Perrigo Company PLC. It trades about 0.15 of its potential returns per unit of risk. Perrigo Company PLC is currently generating about -0.27 per unit of risk. If you would invest  9,776,949  in Bitcoin on October 20, 2024 and sell it today you would earn a total of  658,751  from holding Bitcoin or generate 6.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.24%
ValuesDaily Returns

Bitcoin  vs.  Perrigo Company PLC

 Performance 
       Timeline  
Bitcoin 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Bitcoin exhibited solid returns over the last few months and may actually be approaching a breakup point.
Perrigo Company 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Perrigo Company PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Perrigo Company is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Bitcoin and Perrigo Company Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bitcoin and Perrigo Company

The main advantage of trading using opposite Bitcoin and Perrigo Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin position performs unexpectedly, Perrigo Company 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 Perrigo Company will offset losses from the drop in Perrigo Company's long position.
The idea behind Bitcoin and Perrigo Company PLC 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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