Correlation Between Bitfarms and Piper Sandler

Can any of the company-specific risk be diversified away by investing in both Bitfarms and Piper Sandler 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 Bitfarms and Piper Sandler into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bitfarms and Piper Sandler Companies, you can compare the effects of market volatilities on Bitfarms and Piper Sandler 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 Bitfarms with a short position of Piper Sandler. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitfarms and Piper Sandler.

Diversification Opportunities for Bitfarms and Piper Sandler

0.49

Correlation Coefficient

Bitfarms  Piper Sandler

Very weak diversification

The 3 months correlation between Bitfarms and Piper is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bitfarms and Piper Sandler Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piper Sandler Companies and Bitfarms 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 Bitfarms are associated (or correlated) with Piper Sandler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piper Sandler Companies has no effect on the direction of Bitfarms i.e., Bitfarms and Piper Sandler go up and down completely randomly.

Pair Corralation between Bitfarms and Piper Sandler

Given the investment horizon of 90 days Bitfarms is expected to generate 1.72 times more return on investment than Piper Sandler. However, Bitfarms is 1.72 times more volatile than Piper Sandler Companies. It trades about 0.12 of its potential returns per unit of risk. Piper Sandler Companies is currently generating about 0.19 per unit of risk. If you would invest  173.00  in Bitfarms on September 5, 2024 and sell it today you would earn a total of  26.00  from holding Bitfarms or generate 15.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Bitfarms  vs.  Piper Sandler Companies

Bitfarms

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bitfarms are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Bitfarms reported solid returns over the last few months and may actually be approaching a breakup point.

Piper Sandler Companies

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Piper Sandler Companies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Piper Sandler reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bitfarms and Piper Sandler

The main advantage of trading using opposite Bitfarms and Piper Sandler positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitfarms position performs unexpectedly, Piper Sandler 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 Piper Sandler will offset losses from the drop in Piper Sandler's long position.

The idea behind Bitfarms and Piper Sandler Companies 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.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.