Correlation Between Wrapped Beacon and Wrapped Bitcoin
Can any of the company-specific risk be diversified away by investing in both Wrapped Beacon 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 Wrapped Beacon and Wrapped Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wrapped Beacon ETH and Wrapped Bitcoin, you can compare the effects of market volatilities on Wrapped Beacon 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 Wrapped Beacon with a short position of Wrapped Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wrapped Beacon and Wrapped Bitcoin.
Diversification Opportunities for Wrapped Beacon and Wrapped Bitcoin
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wrapped and Wrapped is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Wrapped Beacon ETH and Wrapped Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wrapped Bitcoin and Wrapped Beacon 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 Wrapped Beacon ETH 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 Wrapped Beacon i.e., Wrapped Beacon and Wrapped Bitcoin go up and down completely randomly.
Pair Corralation between Wrapped Beacon and Wrapped Bitcoin
Assuming the 90 days trading horizon Wrapped Beacon ETH is expected to generate 0.99 times more return on investment than Wrapped Bitcoin. However, Wrapped Beacon ETH is 1.01 times less risky than Wrapped Bitcoin. It trades about 0.32 of its potential returns per unit of risk. Wrapped Bitcoin is currently generating about 0.29 per unit of risk. If you would invest 277,798 in Wrapped Beacon ETH on August 28, 2024 and sell it today you would earn a total of 84,476 from holding Wrapped Beacon ETH or generate 30.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wrapped Beacon ETH vs. Wrapped Bitcoin
Performance |
| Timeline |
| Wrapped Beacon ETH |
| Wrapped Bitcoin |
Wrapped Beacon and Wrapped Bitcoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wrapped Beacon and Wrapped Bitcoin
The main advantage of trading using opposite Wrapped Beacon and Wrapped Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wrapped Beacon 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.| Wrapped Beacon vs. Solana | Wrapped Beacon vs. XRP | Wrapped Beacon vs. Sui | Wrapped Beacon vs. Staked Ether |
| Wrapped Bitcoin vs. Solana | Wrapped Bitcoin vs. XRP | Wrapped Bitcoin vs. Sui | Wrapped Bitcoin vs. Staked Ether |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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