Correlation Between Bitcoin Gold and NMC
Can any of the company-specific risk be diversified away by investing in both Bitcoin Gold and NMC 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 Gold and NMC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin Gold and NMC, you can compare the effects of market volatilities on Bitcoin Gold and NMC 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 Gold with a short position of NMC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin Gold and NMC.
Diversification Opportunities for Bitcoin Gold and NMC
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bitcoin and NMC is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Gold and NMC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMC and Bitcoin Gold 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 Gold are associated (or correlated) with NMC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NMC has no effect on the direction of Bitcoin Gold i.e., Bitcoin Gold and NMC go up and down completely randomly.
Pair Corralation between Bitcoin Gold and NMC
Assuming the 90 days trading horizon Bitcoin Gold is expected to generate 1.47 times more return on investment than NMC. However, Bitcoin Gold is 1.47 times more volatile than NMC. It trades about 0.05 of its potential returns per unit of risk. NMC is currently generating about 0.01 per unit of risk. If you would invest 1,486 in Bitcoin Gold on August 23, 2024 and sell it today you would earn a total of 1,690 from holding Bitcoin Gold or generate 113.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bitcoin Gold vs. NMC
Performance |
| Timeline |
| Bitcoin Gold |
| NMC |
Bitcoin Gold and NMC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin Gold and NMC
The main advantage of trading using opposite Bitcoin Gold and NMC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin Gold position performs unexpectedly, NMC 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 NMC will offset losses from the drop in NMC's long position.| Bitcoin Gold vs. Bitcoin Cash | Bitcoin Gold vs. Bitcoin SV | Bitcoin Gold vs. Staked Ether | Bitcoin Gold vs. EigenLayer |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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