Correlation Between Bittensor and CVT

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

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

Diversification Opportunities for Bittensor and CVT

-0.33

Correlation Coefficient

Bittensor  CVT

Very good diversification

The 3 months correlation between Bittensor and CVT is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Bittensor and CVT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVT and Bittensor 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 Bittensor are associated (or correlated) with CVT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVT has no effect on the direction of Bittensor i.e., Bittensor and CVT go up and down completely randomly.

Pair Corralation between Bittensor and CVT

Assuming the 90 days trading horizon Bittensor is expected to generate 1.14 times more return on investment than CVT. However, Bittensor is 1.14 times more volatile than CVT. It trades about 0.26 of its potential returns per unit of risk. CVT is currently generating about -0.02 per unit of risk. If you would invest  24,765  in Bittensor on September 1, 2024 and sell it today you would earn a total of  43,110  from holding Bittensor or generate 174.08% return on investment over 90 days.

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

Bittensor  vs.  CVT

Bittensor

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bittensor are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Bittensor exhibited solid returns over the last few months and may actually be approaching a breakup point.

CVT

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days CVT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CVT is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bittensor and CVT

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

The idea behind Bittensor and CVT 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.