Correlation Between Monero and Wrapped Bitcoin
Can any of the company-specific risk be diversified away by investing in both Monero and Wrapped Bitcoin 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 Monero and Wrapped Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Monero and Wrapped Bitcoin, you can compare the effects of market volatilities on Monero and Wrapped Bitcoin 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 Monero with a short position of Wrapped Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monero and Wrapped Bitcoin.
Diversification Opportunities for Monero and Wrapped Bitcoin
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monero and Wrapped is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Monero and Wrapped Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wrapped Bitcoin and Monero 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 Monero are associated (or correlated) with Wrapped Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wrapped Bitcoin has no effect on the direction of Monero i.e., Monero and Wrapped Bitcoin go up and down completely randomly.
Pair Corralation between Monero and Wrapped Bitcoin
Assuming the 90 days trading horizon Monero is expected to generate 1.54 times more return on investment than Wrapped Bitcoin. However, Monero is 1.54 times more volatile than Wrapped Bitcoin. It trades about 0.17 of its potential returns per unit of risk. Wrapped Bitcoin is currently generating about 0.11 per unit of risk. If you would invest 17,954 in Monero on October 9, 2024 and sell it today you would earn a total of 2,437 from holding Monero or generate 13.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monero vs. Wrapped Bitcoin
Performance |
| Timeline |
| Monero |
| Wrapped Bitcoin |
Monero and Wrapped Bitcoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monero and Wrapped Bitcoin
The main advantage of trading using opposite Monero and Wrapped Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monero position performs unexpectedly, Wrapped Bitcoin 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 Wrapped Bitcoin will offset losses from the drop in Wrapped Bitcoin's long position.The idea behind Monero and Wrapped Bitcoin pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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