Correlation Between New Gold and BitFrontier Capital
Can any of the company-specific risk be diversified away by investing in both New Gold and BitFrontier Capital 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 New Gold and BitFrontier Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Gold and BitFrontier Capital Holdings, you can compare the effects of market volatilities on New Gold and BitFrontier Capital 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 New Gold with a short position of BitFrontier Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Gold and BitFrontier Capital.
Diversification Opportunities for New Gold and BitFrontier Capital
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between New and BitFrontier is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding New Gold and BitFrontier Capital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BitFrontier Capital and New Gold 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 New Gold are associated (or correlated) with BitFrontier Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BitFrontier Capital has no effect on the direction of New Gold i.e., New Gold and BitFrontier Capital go up and down completely randomly.
Pair Corralation between New Gold and BitFrontier Capital
Considering the 90-day investment horizon New Gold is expected to generate 1.5 times less return on investment than BitFrontier Capital. But when comparing it to its historical volatility, New Gold is 4.35 times less risky than BitFrontier Capital. It trades about 0.1 of its potential returns per unit of risk. BitFrontier Capital Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 0.91 in BitFrontier Capital Holdings on August 25, 2024 and sell it today you would lose (0.64) from holding BitFrontier Capital Holdings or give up 70.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Gold vs. BitFrontier Capital Holdings
Performance |
| Timeline |
| New Gold |
| BitFrontier Capital |
New Gold and BitFrontier Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Gold and BitFrontier Capital
The main advantage of trading using opposite New Gold and BitFrontier Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Gold position performs unexpectedly, BitFrontier Capital 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 BitFrontier Capital will offset losses from the drop in BitFrontier Capital's long position.The idea behind New Gold and BitFrontier Capital Holdings 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.| BitFrontier Capital vs. Morgan Stanley | BitFrontier Capital vs. Goldman Sachs Group | BitFrontier Capital vs. Charles Schwab Corp | BitFrontier Capital vs. Interactive Brokers Group |
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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