Correlation Between Carriage Services and BTC Digital
Can any of the company-specific risk be diversified away by investing in both Carriage Services and BTC Digital 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 Carriage Services and BTC Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carriage Services and BTC Digital, you can compare the effects of market volatilities on Carriage Services and BTC Digital 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 Carriage Services with a short position of BTC Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carriage Services and BTC Digital.
Diversification Opportunities for Carriage Services and BTC Digital
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Carriage and BTC is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Carriage Services and BTC Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTC Digital and Carriage Services 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 Carriage Services are associated (or correlated) with BTC Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTC Digital has no effect on the direction of Carriage Services i.e., Carriage Services and BTC Digital go up and down completely randomly.
Pair Corralation between Carriage Services and BTC Digital
Considering the 90-day investment horizon Carriage Services is expected to generate 26.41 times less return on investment than BTC Digital. But when comparing it to its historical volatility, Carriage Services is 12.39 times less risky than BTC Digital. It trades about 0.05 of its potential returns per unit of risk. BTC Digital is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4.00 in BTC Digital on August 27, 2024 and sell it today you would earn a total of 3.17 from holding BTC Digital or generate 79.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 78.43% |
| Values | Daily Returns |
Carriage Services vs. BTC Digital
Performance |
| Timeline |
| Carriage Services |
| BTC Digital |
Carriage Services and BTC Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carriage Services and BTC Digital
The main advantage of trading using opposite Carriage Services and BTC Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carriage Services position performs unexpectedly, BTC Digital 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 BTC Digital will offset losses from the drop in BTC Digital's long position.| Carriage Services vs. Bright Horizons Family | Carriage Services vs. Smart Share Global | Carriage Services vs. Mister Car Wash | Carriage Services vs. Rollins |
| BTC Digital vs. Bright Horizons Family | BTC Digital vs. Smart Share Global | BTC Digital vs. Mister Car Wash | BTC Digital vs. Rollins |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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