Correlation Between BTC Digital and New Oriental
Can any of the company-specific risk be diversified away by investing in both BTC Digital and New Oriental 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 BTC Digital and New Oriental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BTC Digital and New Oriental Education, you can compare the effects of market volatilities on BTC Digital and New Oriental 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 BTC Digital with a short position of New Oriental. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTC Digital and New Oriental.
Diversification Opportunities for BTC Digital and New Oriental
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BTC and New is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding BTC Digital and New Oriental Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Oriental Education and BTC Digital 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 BTC Digital are associated (or correlated) with New Oriental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Oriental Education has no effect on the direction of BTC Digital i.e., BTC Digital and New Oriental go up and down completely randomly.
Pair Corralation between BTC Digital and New Oriental
Assuming the 90 days horizon BTC Digital is expected to generate 8.35 times more return on investment than New Oriental. However, BTC Digital is 8.35 times more volatile than New Oriental Education. It trades about 0.11 of its potential returns per unit of risk. New Oriental Education is currently generating about -0.03 per unit of risk. If you would invest 3.76 in BTC Digital on August 27, 2024 and sell it today you would earn a total of 3.41 from holding BTC Digital or generate 90.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 85.08% |
| Values | Daily Returns |
BTC Digital vs. New Oriental Education
Performance |
| Timeline |
| BTC Digital |
| New Oriental Education |
BTC Digital and New Oriental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BTC Digital and New Oriental
The main advantage of trading using opposite BTC Digital and New Oriental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTC Digital position performs unexpectedly, New Oriental 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 New Oriental will offset losses from the drop in New Oriental's long position.| BTC Digital vs. Dennys Corp | BTC Digital vs. Universal Display | BTC Digital vs. Xponential Fitness | BTC Digital vs. Chipotle Mexican Grill |
| New Oriental vs. American Public Education | New Oriental vs. Lincoln Educational Services | New Oriental vs. Adtalem Global Education |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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