Correlation Between Bitcoin Cash and Cardano
Can any of the company-specific risk be diversified away by investing in both Bitcoin Cash and Cardano 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 Bitcoin Cash and Cardano into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin Cash and Cardano, you can compare the effects of market volatilities on Bitcoin Cash and Cardano 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 Bitcoin Cash with a short position of Cardano. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin Cash and Cardano.
Diversification Opportunities for Bitcoin Cash and Cardano
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bitcoin and Cardano is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Cash and Cardano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardano and Bitcoin Cash 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 Bitcoin Cash are associated (or correlated) with Cardano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardano has no effect on the direction of Bitcoin Cash i.e., Bitcoin Cash and Cardano go up and down completely randomly.
Pair Corralation between Bitcoin Cash and Cardano
Assuming the 90 days trading horizon Bitcoin Cash is expected to generate 1.34 times more return on investment than Cardano. However, Bitcoin Cash is 1.34 times more volatile than Cardano. It trades about 0.1 of its potential returns per unit of risk. Cardano is currently generating about -0.2 per unit of risk. If you would invest 43,141 in Bitcoin Cash on January 21, 2024 and sell it today you would earn a total of 4,761 from holding Bitcoin Cash or generate 11.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bitcoin Cash vs. Cardano
Performance |
| Timeline |
| Bitcoin Cash |
| Cardano |
Bitcoin Cash and Cardano Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin Cash and Cardano
The main advantage of trading using opposite Bitcoin Cash and Cardano positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin Cash position performs unexpectedly, Cardano 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 Cardano will offset losses from the drop in Cardano's long position.| Bitcoin Cash vs. Bitcoin | Bitcoin Cash vs. Dogecoin | Bitcoin Cash vs. Litecoin | Bitcoin Cash vs. Ethereum Classic |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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