Correlation Between Wrapped Bitcoin and Gold Fields

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

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

Diversification Opportunities for Wrapped Bitcoin and Gold Fields

-0.7

Correlation Coefficient

Wrapped Bitcoin  Gold Fields

Excellent diversification

The 3 months correlation between Wrapped and Gold is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Wrapped Bitcoin and Goldfinch in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Fields 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 Gold Fields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Fields has no effect on the direction of Wrapped Bitcoin i.e., Wrapped Bitcoin and Gold Fields go up and down completely randomly.

Pair Corralation between Wrapped Bitcoin and Gold Fields

Assuming the 90 days trading horizon Wrapped Bitcoin is expected to generate 0.56 times more return on investment than Gold Fields. However, Wrapped Bitcoin is 1.79 times less risky than Gold Fields. It trades about 0.26 of its potential returns per unit of risk. Goldfinch is currently generating about 0.01 per unit of risk. If you would invest  5,741,286  in Wrapped Bitcoin on September 1, 2024 and sell it today you would earn a total of  3,932,419  from holding Wrapped Bitcoin or generate 68.49% return on investment over 90 days.

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

Wrapped Bitcoin  vs.  Goldfinch

Wrapped Bitcoin

Risk-Adjusted Performance

20 of 100

Solid

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

Gold Fields

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Goldfinch are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, Gold Fields is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Wrapped Bitcoin and Gold Fields

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

The idea behind Wrapped Bitcoin and Goldfinch 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.