Correlation Between Bitcoin and Adams Diversified
Can any of the company-specific risk be diversified away by investing in both Bitcoin and Adams Diversified 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 Adams Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin and Adams Diversified Equity, you can compare the effects of market volatilities on Bitcoin and Adams Diversified 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 Adams Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin and Adams Diversified.
Diversification Opportunities for Bitcoin and Adams Diversified
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bitcoin and Adams is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Adams Diversified Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adams Diversified Equity 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 Adams Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adams Diversified Equity has no effect on the direction of Bitcoin i.e., Bitcoin and Adams Diversified go up and down completely randomly.
Pair Corralation between Bitcoin and Adams Diversified
Assuming the 90 days trading horizon Bitcoin is expected to generate 2.57 times more return on investment than Adams Diversified. However, Bitcoin is 2.57 times more volatile than Adams Diversified Equity. It trades about 0.1 of its potential returns per unit of risk. Adams Diversified Equity is currently generating about 0.07 per unit of risk. If you would invest 9,935,606 in Bitcoin on October 25, 2024 and sell it today you would earn a total of 424,294 from holding Bitcoin or generate 4.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 85.71% |
| Values | Daily Returns |
Bitcoin vs. Adams Diversified Equity
Performance |
| Timeline |
| Bitcoin |
| Adams Diversified Equity |
Bitcoin and Adams Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin and Adams Diversified
The main advantage of trading using opposite Bitcoin and Adams Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin position performs unexpectedly, Adams Diversified 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 Adams Diversified will offset losses from the drop in Adams Diversified's long position.The idea behind Bitcoin and Adams Diversified Equity 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.| Adams Diversified vs. Prudential Government Money | Adams Diversified vs. Davis Government Bond | Adams Diversified vs. Ab Government Exchange | Adams Diversified vs. Short Term Government Fund |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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