Correlation Between Wrapped Bitcoin and HPB
Can any of the company-specific risk be diversified away by investing in both Wrapped Bitcoin and HPB 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 HPB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wrapped Bitcoin and HPB, you can compare the effects of market volatilities on Wrapped Bitcoin and HPB 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 HPB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wrapped Bitcoin and HPB.
Diversification Opportunities for Wrapped Bitcoin and HPB
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wrapped and HPB is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Wrapped Bitcoin and HPB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HPB 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 HPB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HPB has no effect on the direction of Wrapped Bitcoin i.e., Wrapped Bitcoin and HPB go up and down completely randomly.
Pair Corralation between Wrapped Bitcoin and HPB
Assuming the 90 days trading horizon Wrapped Bitcoin is expected to generate 0.74 times more return on investment than HPB. However, Wrapped Bitcoin is 1.35 times less risky than HPB. It trades about 0.31 of its potential returns per unit of risk. HPB is currently generating about -0.07 per unit of risk. If you would invest 7,223,793 in Wrapped Bitcoin on August 30, 2024 and sell it today you would earn a total of 2,355,865 from holding Wrapped Bitcoin or generate 32.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wrapped Bitcoin vs. HPB
Performance |
| Timeline |
| Wrapped Bitcoin |
| HPB |
Wrapped Bitcoin and HPB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wrapped Bitcoin and HPB
The main advantage of trading using opposite Wrapped Bitcoin and HPB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wrapped Bitcoin position performs unexpectedly, HPB 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 HPB will offset losses from the drop in HPB'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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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