Correlation Between Bittensor and KEY
Can any of the company-specific risk be diversified away by investing in both Bittensor and KEY 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 Bittensor and KEY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bittensor and KEY, you can compare the effects of market volatilities on Bittensor and KEY 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 Bittensor with a short position of KEY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bittensor and KEY.
Diversification Opportunities for Bittensor and KEY
Excellent diversification
The 3 months correlation between Bittensor and KEY is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bittensor and KEY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEY and Bittensor 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 Bittensor are associated (or correlated) with KEY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEY has no effect on the direction of Bittensor i.e., Bittensor and KEY go up and down completely randomly.
Pair Corralation between Bittensor and KEY
Assuming the 90 days trading horizon Bittensor is expected to generate 1.05 times more return on investment than KEY. However, Bittensor is 1.05 times more volatile than KEY. It trades about 0.01 of its potential returns per unit of risk. KEY is currently generating about -0.05 per unit of risk. If you would invest 52,725 in Bittensor on August 23, 2024 and sell it today you would lose (1,021) from holding Bittensor or give up 1.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bittensor vs. KEY
Performance |
| Timeline |
| Bittensor |
| KEY |
Bittensor and KEY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bittensor and KEY
The main advantage of trading using opposite Bittensor and KEY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bittensor position performs unexpectedly, KEY 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 KEY will offset losses from the drop in KEY's long position.The idea behind Bittensor and KEY 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.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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |