Correlation Between DeFi Technologies and Hut 8
Can any of the company-specific risk be diversified away by investing in both DeFi Technologies and Hut 8 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 Hut 8 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DeFi Technologies and Hut 8 Corp, you can compare the effects of market volatilities on DeFi Technologies and Hut 8 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 Hut 8. Check out your portfolio center. Please also check ongoing floating volatility patterns of DeFi Technologies and Hut 8.
Diversification Opportunities for DeFi Technologies and Hut 8
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DeFi and Hut is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding DeFi Technologies and Hut 8 Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hut 8 Corp 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 Hut 8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hut 8 Corp has no effect on the direction of DeFi Technologies i.e., DeFi Technologies and Hut 8 go up and down completely randomly.
Pair Corralation between DeFi Technologies and Hut 8
Assuming the 90 days horizon DeFi Technologies is expected to generate 2.34 times less return on investment than Hut 8. But when comparing it to its historical volatility, DeFi Technologies is 1.11 times less risky than Hut 8. It trades about 0.15 of its potential returns per unit of risk. Hut 8 Corp is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,718 in Hut 8 Corp on August 30, 2024 and sell it today you would earn a total of 1,127 from holding Hut 8 Corp or generate 65.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
DeFi Technologies vs. Hut 8 Corp
Performance |
| Timeline |
| DeFi Technologies |
| Hut 8 Corp |
DeFi Technologies and Hut 8 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DeFi Technologies and Hut 8
The main advantage of trading using opposite DeFi Technologies and Hut 8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DeFi Technologies position performs unexpectedly, Hut 8 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 Hut 8 will offset losses from the drop in Hut 8's 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 |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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