Correlation Between Ethereum and Bitcoin Cash
Can any of the company-specific risk be diversified away by investing in both Ethereum and Bitcoin Cash 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 Ethereum and Bitcoin Cash into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ethereum and Bitcoin Cash, you can compare the effects of market volatilities on Ethereum and Bitcoin Cash 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 Ethereum with a short position of Bitcoin Cash. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum and Bitcoin Cash.
Diversification Opportunities for Ethereum and Bitcoin Cash
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ethereum and Bitcoin is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and Bitcoin Cash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin Cash and Ethereum 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 Ethereum are associated (or correlated) with Bitcoin Cash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin Cash has no effect on the direction of Ethereum i.e., Ethereum and Bitcoin Cash go up and down completely randomly.
Pair Corralation between Ethereum and Bitcoin Cash
Assuming the 90 days trading horizon Ethereum is expected to generate 1.04 times less return on investment than Bitcoin Cash. In addition to that, Ethereum is 1.01 times more volatile than Bitcoin Cash. It trades about 0.33 of its total potential returns per unit of risk. Bitcoin Cash is currently generating about 0.34 per unit of volatility. If you would invest 36,887 in Bitcoin Cash on August 30, 2024 and sell it today you would earn a total of 14,561 from holding Bitcoin Cash or generate 39.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ethereum vs. Bitcoin Cash
Performance |
| Timeline |
| Ethereum |
| Bitcoin Cash |
Ethereum and Bitcoin Cash Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ethereum and Bitcoin Cash
The main advantage of trading using opposite Ethereum and Bitcoin Cash positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum position performs unexpectedly, Bitcoin Cash 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 Bitcoin Cash will offset losses from the drop in Bitcoin Cash's long position.The idea behind Ethereum and Bitcoin Cash pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Bitcoin Cash vs. Bitcoin Gold | Bitcoin Cash vs. Bitcoin SV | Bitcoin Cash vs. Staked Ether | Bitcoin Cash 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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