Correlation Between DeFi Technologies and Bitfarms
Can any of the company-specific risk be diversified away by investing in both DeFi Technologies and Bitfarms 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 DeFi Technologies and Bitfarms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DeFi Technologies and Bitfarms, you can compare the effects of market volatilities on DeFi Technologies and Bitfarms 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 DeFi Technologies with a short position of Bitfarms. Check out your portfolio center. Please also check ongoing floating volatility patterns of DeFi Technologies and Bitfarms.
Diversification Opportunities for DeFi Technologies and Bitfarms
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between DeFi and Bitfarms is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding DeFi Technologies and Bitfarms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitfarms and DeFi Technologies 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 DeFi Technologies are associated (or correlated) with Bitfarms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitfarms has no effect on the direction of DeFi Technologies i.e., DeFi Technologies and Bitfarms go up and down completely randomly.
Pair Corralation between DeFi Technologies and Bitfarms
Assuming the 90 days horizon DeFi Technologies is expected to generate 1.43 times more return on investment than Bitfarms. However, DeFi Technologies is 1.43 times more volatile than Bitfarms. It trades about 0.11 of its potential returns per unit of risk. Bitfarms is currently generating about 0.08 per unit of risk. If you would invest 9.74 in DeFi Technologies on August 30, 2024 and sell it today you would earn a total of 218.26 from holding DeFi Technologies or generate 2240.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DeFi Technologies vs. Bitfarms
Performance |
| Timeline |
| DeFi Technologies |
| Bitfarms |
DeFi Technologies and Bitfarms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DeFi Technologies and Bitfarms
The main advantage of trading using opposite DeFi Technologies and Bitfarms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DeFi Technologies position performs unexpectedly, Bitfarms 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 Bitfarms will offset losses from the drop in Bitfarms' long position.| DeFi Technologies vs. Argo Blockchain PLC | DeFi Technologies vs. DigiMax Global | DeFi Technologies vs. Galaxy Digital Holdings | DeFi Technologies vs. BIG Blockchain Intelligence |
| Bitfarms vs. HIVE Blockchain Technologies | Bitfarms vs. CleanSpark | Bitfarms vs. Marathon Digital Holdings | Bitfarms vs. Riot Blockchain |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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