Correlation Between Oak Woods and Cipher Mining
Can any of the company-specific risk be diversified away by investing in both Oak Woods 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 Oak Woods and Cipher Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oak Woods Acquisition and Cipher Mining, you can compare the effects of market volatilities on Oak Woods 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 Oak Woods with a short position of Cipher Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oak Woods and Cipher Mining.
Diversification Opportunities for Oak Woods and Cipher Mining
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Oak and Cipher is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Oak Woods Acquisition and Cipher Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cipher Mining and Oak Woods 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 Oak Woods Acquisition 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 Oak Woods i.e., Oak Woods and Cipher Mining go up and down completely randomly.
Pair Corralation between Oak Woods and Cipher Mining
Assuming the 90 days horizon Oak Woods is expected to generate 18.64 times less return on investment than Cipher Mining. But when comparing it to its historical volatility, Oak Woods Acquisition is 5.44 times less risky than Cipher Mining. It trades about 0.04 of its potential returns per unit of risk. Cipher Mining is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 539.00 in Cipher Mining on August 30, 2024 and sell it today you would earn a total of 106.00 from holding Cipher Mining or generate 19.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Oak Woods Acquisition vs. Cipher Mining
Performance |
| Timeline |
| Oak Woods Acquisition |
| Cipher Mining |
Oak Woods and Cipher Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oak Woods and Cipher Mining
The main advantage of trading using opposite Oak Woods and Cipher Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oak Woods 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 Oak Woods Acquisition 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. ClimateRock Class A | Cipher Mining vs. CF Acquisition VII | Cipher Mining vs. DP Cap Acquisition |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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