Correlation Between KLA Tencor and BTC Digital
Can any of the company-specific risk be diversified away by investing in both KLA Tencor 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 KLA Tencor and BTC Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KLA Tencor and BTC Digital, you can compare the effects of market volatilities on KLA Tencor 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 KLA Tencor with a short position of BTC Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of KLA Tencor and BTC Digital.
Diversification Opportunities for KLA Tencor and BTC Digital
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KLA and BTC is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding KLA Tencor and BTC Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTC Digital and KLA Tencor 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 KLA Tencor 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 KLA Tencor i.e., KLA Tencor and BTC Digital go up and down completely randomly.
Pair Corralation between KLA Tencor and BTC Digital
Given the investment horizon of 90 days KLA Tencor is expected to under-perform the BTC Digital. But the stock apears to be less risky and, when comparing its historical volatility, KLA Tencor is 34.58 times less risky than BTC Digital. The stock trades about -0.09 of its potential returns per unit of risk. The BTC Digital is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 182.00 in BTC Digital on August 28, 2024 and sell it today you would earn a total of 1,350 from holding BTC Digital or generate 741.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KLA Tencor vs. BTC Digital
Performance |
| Timeline |
| KLA Tencor |
| BTC Digital |
KLA Tencor and BTC Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KLA Tencor and BTC Digital
The main advantage of trading using opposite KLA Tencor and BTC Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KLA Tencor 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 KLA Tencor 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. WT Offshore | BTC Digital vs. Avient Corp | BTC Digital vs. U Power Limited | BTC Digital vs. Thor Industries |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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