Correlation Between GM and BTC Digital
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and BTC Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and BTC Digital, you can compare the effects of market volatilities on GM 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 GM with a short position of BTC Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and BTC Digital.
Diversification Opportunities for GM and BTC Digital
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and BTC is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and BTC Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTC Digital and GM 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 General Motors 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 GM i.e., GM and BTC Digital go up and down completely randomly.
Pair Corralation between GM and BTC Digital
Allowing for the 90-day total investment horizon GM is expected to generate 20.63 times less return on investment than BTC Digital. But when comparing it to its historical volatility, General Motors is 25.35 times less risky than BTC Digital. It trades about 0.32 of its potential returns per unit of risk. BTC Digital is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2.00 in BTC Digital on August 28, 2024 and sell it today you would earn a total of 4.15 from holding BTC Digital or generate 207.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. BTC Digital
Performance |
| Timeline |
| General Motors |
| BTC Digital |
GM and BTC Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and BTC Digital
The main advantage of trading using opposite GM and BTC Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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.The idea behind General Motors and BTC Digital 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.| 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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |