Correlation Between Bitcoin and MDJM
Can any of the company-specific risk be diversified away by investing in both Bitcoin and MDJM 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 MDJM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin and MDJM, you can compare the effects of market volatilities on Bitcoin and MDJM 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 MDJM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin and MDJM.
Diversification Opportunities for Bitcoin and MDJM
Pay attention - limited upside
The 3 months correlation between Bitcoin and MDJM is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and MDJM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MDJM 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 MDJM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MDJM has no effect on the direction of Bitcoin i.e., Bitcoin and MDJM go up and down completely randomly.
Pair Corralation between Bitcoin and MDJM
Assuming the 90 days trading horizon Bitcoin is expected to generate 3.14 times less return on investment than MDJM. But when comparing it to its historical volatility, Bitcoin is 5.0 times less risky than MDJM. It trades about 0.1 of its potential returns per unit of risk. MDJM is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 16.00 in MDJM on October 28, 2024 and sell it today you would earn a total of 1.00 from holding MDJM or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 90.7% |
| Values | Daily Returns |
Bitcoin vs. MDJM
Performance |
| Timeline |
| Bitcoin |
| MDJM |
Bitcoin and MDJM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin and MDJM
The main advantage of trading using opposite Bitcoin and MDJM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin position performs unexpectedly, MDJM 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 MDJM will offset losses from the drop in MDJM's long position.The idea behind Bitcoin and MDJM 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.| MDJM vs. Nasdaq Inc | MDJM vs. Definitive Healthcare Corp | MDJM vs. SmartStop Self Storage | MDJM vs. Cadence Design Systems |
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.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |