Correlation Between Litecoin and SIB
Can any of the company-specific risk be diversified away by investing in both Litecoin and SIB 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 Litecoin and SIB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Litecoin and SIB, you can compare the effects of market volatilities on Litecoin and SIB 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 Litecoin with a short position of SIB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Litecoin and SIB.
Diversification Opportunities for Litecoin and SIB
Very weak diversification
The 3 months correlation between Litecoin and SIB is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Litecoin and SIB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIB and Litecoin 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 Litecoin are associated (or correlated) with SIB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIB has no effect on the direction of Litecoin i.e., Litecoin and SIB go up and down completely randomly.
Pair Corralation between Litecoin and SIB
If you would invest 8,309 in Litecoin on August 30, 2024 and sell it today you would earn a total of 1,303 from holding Litecoin or generate 15.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 0.76% |
| Values | Daily Returns |
Litecoin vs. SIB
Performance |
| Timeline |
| Litecoin |
| SIB |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Litecoin and SIB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Litecoin and SIB
The main advantage of trading using opposite Litecoin and SIB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Litecoin position performs unexpectedly, SIB 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 SIB will offset losses from the drop in SIB's long position.The idea behind Litecoin and SIB 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.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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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