Correlation Between Hut 8 and Stronghold Digital
Can any of the company-specific risk be diversified away by investing in both Hut 8 and Stronghold 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 Hut 8 and Stronghold Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hut 8 Corp and Stronghold Digital Mining, you can compare the effects of market volatilities on Hut 8 and Stronghold 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 Hut 8 with a short position of Stronghold Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hut 8 and Stronghold Digital.
Diversification Opportunities for Hut 8 and Stronghold Digital
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hut and Stronghold is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Hut 8 Corp and Stronghold Digital Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stronghold Digital Mining and Hut 8 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 Hut 8 Corp are associated (or correlated) with Stronghold Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stronghold Digital Mining has no effect on the direction of Hut 8 i.e., Hut 8 and Stronghold Digital go up and down completely randomly.
Pair Corralation between Hut 8 and Stronghold Digital
Considering the 90-day investment horizon Hut 8 Corp is expected to generate 0.79 times more return on investment than Stronghold Digital. However, Hut 8 Corp is 1.27 times less risky than Stronghold Digital. It trades about 0.08 of its potential returns per unit of risk. Stronghold Digital Mining is currently generating about 0.04 per unit of risk. If you would invest 530.00 in Hut 8 Corp on August 28, 2024 and sell it today you would earn a total of 1,994 from holding Hut 8 Corp or generate 376.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hut 8 Corp vs. Stronghold Digital Mining
Performance |
| Timeline |
| Hut 8 Corp |
| Stronghold Digital Mining |
Hut 8 and Stronghold Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hut 8 and Stronghold Digital
The main advantage of trading using opposite Hut 8 and Stronghold Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hut 8 position performs unexpectedly, Stronghold 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 Stronghold Digital will offset losses from the drop in Stronghold Digital's long position.The idea behind Hut 8 Corp and Stronghold Digital Mining 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.| Stronghold Digital vs. Terawulf | Stronghold Digital vs. Iris Energy | Stronghold Digital vs. Argo Blockchain PLC | Stronghold Digital 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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