Correlation Between NYSE Composite and Wrapped Bitcoin
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Wrapped Bitcoin 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 NYSE Composite and Wrapped Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Wrapped Bitcoin, you can compare the effects of market volatilities on NYSE Composite and Wrapped Bitcoin 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 NYSE Composite with a short position of Wrapped Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Wrapped Bitcoin.
Diversification Opportunities for NYSE Composite and Wrapped Bitcoin
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Wrapped is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Wrapped Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wrapped Bitcoin and NYSE Composite 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 NYSE Composite are associated (or correlated) with Wrapped Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wrapped Bitcoin has no effect on the direction of NYSE Composite i.e., NYSE Composite and Wrapped Bitcoin go up and down completely randomly.
Pair Corralation between NYSE Composite and Wrapped Bitcoin
Assuming the 90 days trading horizon NYSE Composite is expected to generate 7.87 times less return on investment than Wrapped Bitcoin. But when comparing it to its historical volatility, NYSE Composite is 6.68 times less risky than Wrapped Bitcoin. It trades about 0.26 of its potential returns per unit of risk. Wrapped Bitcoin is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 7,223,793 in Wrapped Bitcoin on August 30, 2024 and sell it today you would earn a total of 2,355,865 from holding Wrapped Bitcoin or generate 32.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Wrapped Bitcoin
Performance |
| Timeline |
NYSE Composite and Wrapped Bitcoin Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Wrapped Bitcoin
Pair trading matchups for Wrapped Bitcoin
Pair Trading with NYSE Composite and Wrapped Bitcoin
The main advantage of trading using opposite NYSE Composite and Wrapped Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Wrapped Bitcoin 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 Wrapped Bitcoin will offset losses from the drop in Wrapped Bitcoin's long position.| NYSE Composite vs. Delek Drilling | NYSE Composite vs. Helmerich and Payne | NYSE Composite vs. Waste Management | NYSE Composite vs. US Global Investors |
| Wrapped Bitcoin vs. Staked Ether | Wrapped Bitcoin vs. Cronos | Wrapped Bitcoin vs. XMR | Wrapped Bitcoin vs. Tether |
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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