Correlation Between PPT and Wrapped Bitcoin
Can any of the company-specific risk be diversified away by investing in both PPT 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 PPT and Wrapped Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPT and Wrapped Bitcoin, you can compare the effects of market volatilities on PPT 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 PPT with a short position of Wrapped Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPT and Wrapped Bitcoin.
Diversification Opportunities for PPT and Wrapped Bitcoin
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between PPT and Wrapped is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding PPT and Wrapped Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wrapped Bitcoin and PPT 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 PPT 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 PPT i.e., PPT and Wrapped Bitcoin go up and down completely randomly.
Pair Corralation between PPT and Wrapped Bitcoin
Assuming the 90 days trading horizon PPT is expected to generate 2.97 times more return on investment than Wrapped Bitcoin. However, PPT is 2.97 times more volatile than Wrapped Bitcoin. It trades about 0.09 of its potential returns per unit of risk. Wrapped Bitcoin is currently generating about 0.1 per unit of risk. If you would invest 6.48 in PPT on August 24, 2024 and sell it today you would lose (2.35) from holding PPT or give up 36.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PPT vs. Wrapped Bitcoin
Performance |
| Timeline |
| PPT |
| Wrapped Bitcoin |
PPT and Wrapped Bitcoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPT and Wrapped Bitcoin
The main advantage of trading using opposite PPT and Wrapped Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPT 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.The idea behind PPT and Wrapped Bitcoin 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.| Wrapped Bitcoin vs. Wrapped Beacon ETH | Wrapped Bitcoin vs. Wrapped eETH | Wrapped Bitcoin vs. Staked Ether | Wrapped Bitcoin vs. EigenLayer |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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