Correlation Between Wrapped Bitcoin and USD Coin
Can any of the company-specific risk be diversified away by investing in both Wrapped Bitcoin and USD Coin 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 USD Coin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wrapped Bitcoin and USD Coin, you can compare the effects of market volatilities on Wrapped Bitcoin and USD Coin 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 USD Coin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wrapped Bitcoin and USD Coin.
Diversification Opportunities for Wrapped Bitcoin and USD Coin
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Wrapped and USD is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Wrapped Bitcoin and USD Coin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USD Coin 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 USD Coin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USD Coin has no effect on the direction of Wrapped Bitcoin i.e., Wrapped Bitcoin and USD Coin go up and down completely randomly.
Pair Corralation between Wrapped Bitcoin and USD Coin
Assuming the 90 days trading horizon Wrapped Bitcoin is expected to generate 32.95 times more return on investment than USD Coin. However, Wrapped Bitcoin is 32.95 times more volatile than USD Coin. It trades about 0.1 of its potential returns per unit of risk. USD Coin is currently generating about 0.0 per unit of risk. If you would invest 1,683,933 in Wrapped Bitcoin on August 23, 2024 and sell it today you would earn a total of 8,165,652 from holding Wrapped Bitcoin or generate 484.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wrapped Bitcoin vs. USD Coin
Performance |
| Timeline |
| Wrapped Bitcoin |
| USD Coin |
Wrapped Bitcoin and USD Coin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wrapped Bitcoin and USD Coin
The main advantage of trading using opposite Wrapped Bitcoin and USD Coin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wrapped Bitcoin position performs unexpectedly, USD Coin 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 USD Coin will offset losses from the drop in USD Coin's long position.| Wrapped Bitcoin vs. Solana | Wrapped Bitcoin vs. XRP | 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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