Correlation Between DeFi Technologies and Terawulf
Can any of the company-specific risk be diversified away by investing in both DeFi Technologies and Terawulf 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 Terawulf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DeFi Technologies and Terawulf, you can compare the effects of market volatilities on DeFi Technologies and Terawulf 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 Terawulf. Check out your portfolio center. Please also check ongoing floating volatility patterns of DeFi Technologies and Terawulf.
Diversification Opportunities for DeFi Technologies and Terawulf
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between DeFi and Terawulf is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding DeFi Technologies and Terawulf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terawulf 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 Terawulf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terawulf has no effect on the direction of DeFi Technologies i.e., DeFi Technologies and Terawulf go up and down completely randomly.
Pair Corralation between DeFi Technologies and Terawulf
Assuming the 90 days horizon DeFi Technologies is expected to generate 1.26 times less return on investment than Terawulf. In addition to that, DeFi Technologies is 1.06 times more volatile than Terawulf. It trades about 0.13 of its total potential returns per unit of risk. Terawulf is currently generating about 0.18 per unit of volatility. If you would invest 205.00 in Terawulf on September 1, 2024 and sell it today you would earn a total of 584.00 from holding Terawulf or generate 284.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DeFi Technologies vs. Terawulf
Performance |
| Timeline |
| DeFi Technologies |
| Terawulf |
DeFi Technologies and Terawulf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DeFi Technologies and Terawulf
The main advantage of trading using opposite DeFi Technologies and Terawulf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DeFi Technologies position performs unexpectedly, Terawulf 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 Terawulf will offset losses from the drop in Terawulf'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 |
| Terawulf vs. Iris Energy | Terawulf vs. Stronghold Digital Mining | Terawulf vs. Argo Blockchain PLC | Terawulf vs. Bitfarms |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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