Correlation Between UBQ and Bitcoin Cash
Can any of the company-specific risk be diversified away by investing in both UBQ and Bitcoin Cash 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 UBQ and Bitcoin Cash into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBQ and Bitcoin Cash, you can compare the effects of market volatilities on UBQ and Bitcoin Cash 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 UBQ with a short position of Bitcoin Cash. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBQ and Bitcoin Cash.
Diversification Opportunities for UBQ and Bitcoin Cash
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between UBQ and Bitcoin is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding UBQ and Bitcoin Cash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin Cash and UBQ 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 UBQ are associated (or correlated) with Bitcoin Cash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin Cash has no effect on the direction of UBQ i.e., UBQ and Bitcoin Cash go up and down completely randomly.
Pair Corralation between UBQ and Bitcoin Cash
Assuming the 90 days trading horizon UBQ is expected to generate 1.17 times less return on investment than Bitcoin Cash. But when comparing it to its historical volatility, UBQ is 1.07 times less risky than Bitcoin Cash. It trades about 0.32 of its potential returns per unit of risk. Bitcoin Cash is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 36,887 in Bitcoin Cash on August 30, 2024 and sell it today you would earn a total of 14,561 from holding Bitcoin Cash or generate 39.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
UBQ vs. Bitcoin Cash
Performance |
| Timeline |
| UBQ |
| Bitcoin Cash |
UBQ and Bitcoin Cash Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UBQ and Bitcoin Cash
The main advantage of trading using opposite UBQ and Bitcoin Cash positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBQ position performs unexpectedly, Bitcoin Cash 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 Bitcoin Cash will offset losses from the drop in Bitcoin Cash's long position.The idea behind UBQ and Bitcoin Cash 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.| Bitcoin Cash vs. Bitcoin Gold | Bitcoin Cash vs. Bitcoin SV | Bitcoin Cash vs. Staked Ether | Bitcoin Cash 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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