Correlation Between Bitfarms and Terawulf

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

By analyzing existing cross correlation between Bitfarms and Terawulf, you can compare the effects of market volatilities on Bitfarms and Terawulf 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 Terawulf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitfarms and Terawulf.

Diversification Opportunities for Bitfarms and Terawulf

0.59

Correlation Coefficient

Bitfarms  Terawulf

Very weak diversification

The 3 months correlation between Bitfarms and Terawulf is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bitfarms and Terawulf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terawulf 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 Terawulf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terawulf has no effect on the direction of Bitfarms i.e., Bitfarms and Terawulf go up and down completely randomly.

Pair Corralation between Bitfarms and Terawulf

Given the investment horizon of 90 days Bitfarms is expected to generate 1.63 times less return on investment than Terawulf. In addition to that, Bitfarms is 1.05 times more volatile than Terawulf. It trades about 0.04 of its total potential returns per unit of risk. Terawulf is currently generating about 0.07 per unit of volatility. If you would invest  689.00  in Terawulf on August 31, 2024 and sell it today you would earn a total of  40.00  from holding Terawulf or generate 5.81% return on investment over 90 days.

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

Bitfarms  vs.  Terawulf

Bitfarms

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bitfarms are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Bitfarms reported solid returns over the last few months and may actually be approaching a breakup point.

Terawulf

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Terawulf are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating essential indicators, Terawulf reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bitfarms and Terawulf

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

The idea behind Bitfarms and Terawulf 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.