Correlation Between Bitcoin and College Retirement
Can any of the company-specific risk be diversified away by investing in both Bitcoin and College Retirement 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 College Retirement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin and College Retirement Equities, you can compare the effects of market volatilities on Bitcoin and College Retirement 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 College Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin and College Retirement.
Diversification Opportunities for Bitcoin and College Retirement
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bitcoin and College is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and College Retirement Equities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on College Retirement 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 College Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of College Retirement has no effect on the direction of Bitcoin i.e., Bitcoin and College Retirement go up and down completely randomly.
Pair Corralation between Bitcoin and College Retirement
Assuming the 90 days trading horizon Bitcoin is expected to generate 10.46 times more return on investment than College Retirement. However, Bitcoin is 10.46 times more volatile than College Retirement Equities. It trades about 0.09 of its potential returns per unit of risk. College Retirement Equities is currently generating about 0.1 per unit of risk. If you would invest 2,325,278 in Bitcoin on October 26, 2024 and sell it today you would earn a total of 8,135,722 from holding Bitcoin or generate 349.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 60.32% |
| Values | Daily Returns |
Bitcoin vs. College Retirement Equities
Performance |
| Timeline |
| Bitcoin |
| College Retirement |
Bitcoin and College Retirement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin and College Retirement
The main advantage of trading using opposite Bitcoin and College Retirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin position performs unexpectedly, College Retirement 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 College Retirement will offset losses from the drop in College Retirement's long position.The idea behind Bitcoin and College Retirement Equities 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.| College Retirement vs. Vanguard Total Stock | College Retirement vs. Vanguard 500 Index | College Retirement vs. Vanguard Total Stock | College Retirement vs. Vanguard Total Stock |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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