Correlation Between Wrapped Bitcoin and Cardano
Can any of the company-specific risk be diversified away by investing in both Wrapped Bitcoin and Cardano 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 Bitcoin and Cardano into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wrapped Bitcoin and Cardano, you can compare the effects of market volatilities on Wrapped Bitcoin and Cardano 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 Bitcoin with a short position of Cardano. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wrapped Bitcoin and Cardano.
Diversification Opportunities for Wrapped Bitcoin and Cardano
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wrapped and Cardano is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Wrapped Bitcoin and Cardano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardano and Wrapped Bitcoin 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 Bitcoin are associated (or correlated) with Cardano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardano has no effect on the direction of Wrapped Bitcoin i.e., Wrapped Bitcoin and Cardano go up and down completely randomly.
Pair Corralation between Wrapped Bitcoin and Cardano
Assuming the 90 days trading horizon Wrapped Bitcoin is expected to generate 1.47 times more return on investment than Cardano. However, Wrapped Bitcoin is 1.47 times more volatile than Cardano. It trades about 0.1 of its potential returns per unit of risk. Cardano is currently generating about 0.1 per unit of risk. If you would invest 1,680,081 in Wrapped Bitcoin on August 27, 2024 and sell it today you would earn a total of 8,072,959 from holding Wrapped Bitcoin or generate 480.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wrapped Bitcoin vs. Cardano
Performance |
| Timeline |
| Wrapped Bitcoin |
| Cardano |
Wrapped Bitcoin and Cardano Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wrapped Bitcoin and Cardano
The main advantage of trading using opposite Wrapped Bitcoin and Cardano positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wrapped Bitcoin position performs unexpectedly, Cardano 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 Cardano will offset losses from the drop in Cardano's long position.| Wrapped Bitcoin vs. Staked Ether | Wrapped Bitcoin vs. Cronos | Wrapped Bitcoin vs. XMR | Wrapped Bitcoin vs. Tether |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |