Correlation Between Netcapital and Bit Digital
Can any of the company-specific risk be diversified away by investing in both Netcapital and Bit 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 Netcapital and Bit Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netcapital and Bit Digital, you can compare the effects of market volatilities on Netcapital and Bit 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 Netcapital with a short position of Bit Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netcapital and Bit Digital.
Diversification Opportunities for Netcapital and Bit Digital
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Netcapital and Bit is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Netcapital and Bit Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bit Digital and Netcapital 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 Netcapital are associated (or correlated) with Bit Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bit Digital has no effect on the direction of Netcapital i.e., Netcapital and Bit Digital go up and down completely randomly.
Pair Corralation between Netcapital and Bit Digital
Given the investment horizon of 90 days Netcapital is expected to generate 0.49 times more return on investment than Bit Digital. However, Netcapital is 2.03 times less risky than Bit Digital. It trades about 0.18 of its potential returns per unit of risk. Bit Digital is currently generating about 0.05 per unit of risk. If you would invest 159.00 in Netcapital on August 24, 2024 and sell it today you would earn a total of 26.00 from holding Netcapital or generate 16.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netcapital vs. Bit Digital
Performance |
| Timeline |
| Netcapital |
| Bit Digital |
Netcapital and Bit Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netcapital and Bit Digital
The main advantage of trading using opposite Netcapital and Bit Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netcapital position performs unexpectedly, Bit 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 Bit Digital will offset losses from the drop in Bit Digital's long position.| Netcapital vs. Applied Blockchain | Netcapital vs. Zhong Yang Financial | Netcapital vs. Magic Empire Global | Netcapital vs. Lazard |
| Bit Digital vs. Hut 8 Corp | Bit Digital vs. HIVE Blockchain Technologies | Bit Digital vs. CleanSpark | Bit Digital vs. Terawulf |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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