Correlation Between Wrapped Bitcoin and JAR
Can any of the company-specific risk be diversified away by investing in both Wrapped Bitcoin and JAR 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 JAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wrapped Bitcoin and JAR, you can compare the effects of market volatilities on Wrapped Bitcoin and JAR 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 JAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wrapped Bitcoin and JAR.
Diversification Opportunities for Wrapped Bitcoin and JAR
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wrapped and JAR is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Wrapped Bitcoin and JAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAR 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 JAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAR has no effect on the direction of Wrapped Bitcoin i.e., Wrapped Bitcoin and JAR go up and down completely randomly.
Pair Corralation between Wrapped Bitcoin and JAR
Assuming the 90 days trading horizon Wrapped Bitcoin is expected to generate 0.83 times more return on investment than JAR. However, Wrapped Bitcoin is 1.21 times less risky than JAR. It trades about 0.32 of its potential returns per unit of risk. JAR is currently generating about 0.16 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 | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wrapped Bitcoin vs. JAR
Performance |
| Timeline |
| Wrapped Bitcoin |
| JAR |
Wrapped Bitcoin and JAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wrapped Bitcoin and JAR
The main advantage of trading using opposite Wrapped Bitcoin and JAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wrapped Bitcoin position performs unexpectedly, JAR 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 JAR will offset losses from the drop in JAR'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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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