Correlation Between STEPN and Bitcoin Gold

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

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

Diversification Opportunities for STEPN and Bitcoin Gold

0.85

Correlation Coefficient

STEPN  Bitcoin Gold

Very poor diversification

The 3 months correlation between STEPN and Bitcoin is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding STEPN and Bitcoin Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin Gold and STEPN 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 STEPN are associated (or correlated) with Bitcoin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin Gold has no effect on the direction of STEPN i.e., STEPN and Bitcoin Gold go up and down completely randomly.

Pair Corralation between STEPN and Bitcoin Gold

Assuming the 90 days trading horizon STEPN is expected to generate 1.65 times more return on investment than Bitcoin Gold. However, STEPN is 1.65 times more volatile than Bitcoin Gold. It trades about 0.18 of its potential returns per unit of risk. Bitcoin Gold is currently generating about 0.2 per unit of risk. If you would invest  11.00  in STEPN on September 1, 2024 and sell it today you would earn a total of  12.00  from holding STEPN or generate 109.09% return on investment over 90 days.

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

STEPN  vs.  Bitcoin Gold

STEPN

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in STEPN are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, STEPN exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bitcoin Gold

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin Gold are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Bitcoin Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with STEPN and Bitcoin Gold

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

The idea behind STEPN and Bitcoin Gold 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.