Correlation Between Wrapped Bitcoin and IOTA
Can any of the company-specific risk be diversified away by investing in both Wrapped Bitcoin and IOTA 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 IOTA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wrapped Bitcoin and IOTA, you can compare the effects of market volatilities on Wrapped Bitcoin and IOTA 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 IOTA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wrapped Bitcoin and IOTA.
Diversification Opportunities for Wrapped Bitcoin and IOTA
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wrapped and IOTA is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Wrapped Bitcoin and IOTA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IOTA 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 IOTA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IOTA has no effect on the direction of Wrapped Bitcoin i.e., Wrapped Bitcoin and IOTA go up and down completely randomly.
Pair Corralation between Wrapped Bitcoin and IOTA
Assuming the 90 days trading horizon Wrapped Bitcoin is expected to generate 0.29 times more return on investment than IOTA. However, Wrapped Bitcoin is 3.41 times less risky than IOTA. It trades about 0.11 of its potential returns per unit of risk. IOTA is currently generating about -0.2 per unit of risk. If you would invest 9,247,408 in Wrapped Bitcoin on November 9, 2024 and sell it today you would earn a total of 406,641 from holding Wrapped Bitcoin or generate 4.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wrapped Bitcoin vs. IOTA
Performance |
| Timeline |
| Wrapped Bitcoin |
| IOTA |
Wrapped Bitcoin and IOTA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wrapped Bitcoin and IOTA
The main advantage of trading using opposite Wrapped Bitcoin and IOTA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wrapped Bitcoin position performs unexpectedly, IOTA 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 IOTA will offset losses from the drop in IOTA's long position.| Wrapped Bitcoin vs. XRP | Wrapped Bitcoin vs. Solana | 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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