Correlation Between SPTSX Dividend and Cathedra Bitcoin

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Can any of the company-specific risk be diversified away by investing in both SPTSX Dividend and Cathedra Bitcoin 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 SPTSX Dividend and Cathedra Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPTSX Dividend Aristocrats and Cathedra Bitcoin, you can compare the effects of market volatilities on SPTSX Dividend and Cathedra Bitcoin 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 SPTSX Dividend with a short position of Cathedra Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPTSX Dividend and Cathedra Bitcoin.

Diversification Opportunities for SPTSX Dividend and Cathedra Bitcoin

-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between SPTSX and Cathedra is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding SPTSX Dividend Aristocrats and Cathedra Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathedra Bitcoin and SPTSX Dividend 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 SPTSX Dividend Aristocrats are associated (or correlated) with Cathedra Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathedra Bitcoin has no effect on the direction of SPTSX Dividend i.e., SPTSX Dividend and Cathedra Bitcoin go up and down completely randomly.
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Pair Corralation between SPTSX Dividend and Cathedra Bitcoin

Assuming the 90 days trading horizon SPTSX Dividend Aristocrats is expected to generate 0.09 times more return on investment than Cathedra Bitcoin. However, SPTSX Dividend Aristocrats is 11.48 times less risky than Cathedra Bitcoin. It trades about 0.15 of its potential returns per unit of risk. Cathedra Bitcoin is currently generating about 0.01 per unit of risk. If you would invest  30,157  in SPTSX Dividend Aristocrats on September 2, 2024 and sell it today you would earn a total of  7,414  from holding SPTSX Dividend Aristocrats or generate 24.58% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.2%
ValuesDaily Returns

SPTSX Dividend Aristocrats  vs.  Cathedra Bitcoin

 Performance 
       Timeline  

SPTSX Dividend and Cathedra Bitcoin Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SPTSX Dividend and Cathedra Bitcoin

The main advantage of trading using opposite SPTSX Dividend and Cathedra Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPTSX Dividend position performs unexpectedly, Cathedra Bitcoin 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 Cathedra Bitcoin will offset losses from the drop in Cathedra Bitcoin's long position.
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The idea behind SPTSX Dividend Aristocrats and Cathedra Bitcoin 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.
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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