Correlation Between Bitcoin and Worldcoin
Can any of the company-specific risk be diversified away by investing in both Bitcoin and Worldcoin 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 Worldcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin and Worldcoin, you can compare the effects of market volatilities on Bitcoin and Worldcoin 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 Worldcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin and Worldcoin.
Diversification Opportunities for Bitcoin and Worldcoin
Poor diversification
The 3 months correlation between Bitcoin and Worldcoin is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Worldcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldcoin 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 Worldcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldcoin has no effect on the direction of Bitcoin i.e., Bitcoin and Worldcoin go up and down completely randomly.
Pair Corralation between Bitcoin and Worldcoin
Assuming the 90 days trading horizon Bitcoin is expected to generate 1.24 times more return on investment than Worldcoin. However, Bitcoin is 1.24 times more volatile than Worldcoin. It trades about 0.09 of its potential returns per unit of risk. Worldcoin is currently generating about -0.02 per unit of risk. If you would invest 2,325,278 in Bitcoin on August 27, 2024 and sell it today you would earn a total of 7,451,226 from holding Bitcoin or generate 320.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 63.43% |
| Values | Daily Returns |
Bitcoin vs. Worldcoin
Performance |
| Timeline |
| Bitcoin |
| Worldcoin |
Bitcoin and Worldcoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin and Worldcoin
The main advantage of trading using opposite Bitcoin and Worldcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin position performs unexpectedly, Worldcoin 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 Worldcoin will offset losses from the drop in Worldcoin's long position.The idea behind Bitcoin and Worldcoin 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |