Correlation Between Wrapped Bitcoin and DENT
Can any of the company-specific risk be diversified away by investing in both Wrapped Bitcoin and DENT 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 Wrapped Bitcoin and DENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wrapped Bitcoin and DENT, you can compare the effects of market volatilities on Wrapped Bitcoin and DENT 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 Wrapped Bitcoin with a short position of DENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wrapped Bitcoin and DENT.
Diversification Opportunities for Wrapped Bitcoin and DENT
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wrapped and DENT is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Wrapped Bitcoin and DENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DENT and Wrapped Bitcoin 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 Wrapped Bitcoin are associated (or correlated) with DENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DENT has no effect on the direction of Wrapped Bitcoin i.e., Wrapped Bitcoin and DENT go up and down completely randomly.
Pair Corralation between Wrapped Bitcoin and DENT
Assuming the 90 days trading horizon Wrapped Bitcoin is expected to generate 1.2 times more return on investment than DENT. However, Wrapped Bitcoin is 1.2 times more volatile than DENT. It trades about 0.09 of its potential returns per unit of risk. DENT is currently generating about 0.07 per unit of risk. If you would invest 1,778,535 in Wrapped Bitcoin on September 3, 2024 and sell it today you would earn a total of 7,787,617 from holding Wrapped Bitcoin or generate 437.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Wrapped Bitcoin vs. DENT
Performance |
Timeline |
Wrapped Bitcoin |
DENT |
Wrapped Bitcoin and DENT Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wrapped Bitcoin and DENT
The main advantage of trading using opposite Wrapped Bitcoin and DENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wrapped Bitcoin position performs unexpectedly, DENT 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 DENT will offset losses from the drop in DENT's long position.Wrapped Bitcoin vs. XRP | Wrapped Bitcoin vs. Solana | Wrapped Bitcoin vs. Staked Ether | Wrapped Bitcoin vs. Toncoin |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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