Correlation Between Wrapped Bitcoin and RCN
Can any of the company-specific risk be diversified away by investing in both Wrapped Bitcoin and RCN 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 RCN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wrapped Bitcoin and RCN, you can compare the effects of market volatilities on Wrapped Bitcoin and RCN 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 RCN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wrapped Bitcoin and RCN.
Diversification Opportunities for Wrapped Bitcoin and RCN
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Wrapped and RCN is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Wrapped Bitcoin and RCN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCN 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 RCN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCN has no effect on the direction of Wrapped Bitcoin i.e., Wrapped Bitcoin and RCN go up and down completely randomly.
Pair Corralation between Wrapped Bitcoin and RCN
Assuming the 90 days trading horizon Wrapped Bitcoin is expected to under-perform the RCN. But the crypto coin apears to be less risky and, when comparing its historical volatility, Wrapped Bitcoin is 11.9 times less risky than RCN. The crypto coin trades about -0.27 of its potential returns per unit of risk. The RCN is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 0.08 in RCN on November 28, 2024 and sell it today you would lose (0.04) from holding RCN or give up 44.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wrapped Bitcoin vs. RCN
Performance |
| Timeline |
| Wrapped Bitcoin |
| RCN |
Wrapped Bitcoin and RCN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wrapped Bitcoin and RCN
The main advantage of trading using opposite Wrapped Bitcoin and RCN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wrapped Bitcoin position performs unexpectedly, RCN 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 RCN will offset losses from the drop in RCN's long position.| Wrapped Bitcoin vs. Staked Ether | Wrapped Bitcoin vs. Cronos | Wrapped Bitcoin vs. Monero | 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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