Correlation Between MGT Capital and Cipher Mining
Can any of the company-specific risk be diversified away by investing in both MGT Capital and Cipher Mining 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 MGT Capital and Cipher Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGT Capital Investments and Cipher Mining, you can compare the effects of market volatilities on MGT Capital and Cipher Mining 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 MGT Capital with a short position of Cipher Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGT Capital and Cipher Mining.
Diversification Opportunities for MGT Capital and Cipher Mining
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MGT and Cipher is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding MGT Capital Investments and Cipher Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cipher Mining and MGT Capital 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 MGT Capital Investments are associated (or correlated) with Cipher Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cipher Mining has no effect on the direction of MGT Capital i.e., MGT Capital and Cipher Mining go up and down completely randomly.
Pair Corralation between MGT Capital and Cipher Mining
Given the investment horizon of 90 days MGT Capital is expected to generate 1.24 times less return on investment than Cipher Mining. In addition to that, MGT Capital is 1.49 times more volatile than Cipher Mining. It trades about 0.05 of its total potential returns per unit of risk. Cipher Mining is currently generating about 0.09 per unit of volatility. If you would invest 78.00 in Cipher Mining on August 30, 2024 and sell it today you would earn a total of 567.00 from holding Cipher Mining or generate 726.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 31.05% |
| Values | Daily Returns |
MGT Capital Investments vs. Cipher Mining
Performance |
| Timeline |
| MGT Capital Investments |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Cipher Mining |
MGT Capital and Cipher Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGT Capital and Cipher Mining
The main advantage of trading using opposite MGT Capital and Cipher Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGT Capital position performs unexpectedly, Cipher Mining 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 Cipher Mining will offset losses from the drop in Cipher Mining's long position.The idea behind MGT Capital Investments and Cipher 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.| Cipher Mining vs. Iris Energy | Cipher Mining vs. CleanSpark | Cipher Mining vs. Stronghold Digital Mining | Cipher Mining 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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