Correlation Between Bitcoin Cash and Lisk
Can any of the company-specific risk be diversified away by investing in both Bitcoin Cash and Lisk 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 Lisk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin Cash and Lisk, you can compare the effects of market volatilities on Bitcoin Cash and Lisk 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 Lisk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin Cash and Lisk.
Diversification Opportunities for Bitcoin Cash and Lisk
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bitcoin and Lisk is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Cash and Lisk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lisk 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 Lisk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lisk has no effect on the direction of Bitcoin Cash i.e., Bitcoin Cash and Lisk go up and down completely randomly.
Pair Corralation between Bitcoin Cash and Lisk
Assuming the 90 days trading horizon Bitcoin Cash is expected to generate 0.84 times more return on investment than Lisk. However, Bitcoin Cash is 1.2 times less risky than Lisk. It trades about 0.16 of its potential returns per unit of risk. Lisk is currently generating about 0.09 per unit of risk. If you would invest 24,372 in Bitcoin Cash on January 26, 2024 and sell it today you would earn a total of 26,116 from holding Bitcoin Cash or generate 107.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bitcoin Cash vs. Lisk
Performance |
| Timeline |
| Bitcoin Cash |
| Lisk |
Bitcoin Cash and Lisk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin Cash and Lisk
The main advantage of trading using opposite Bitcoin Cash and Lisk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin Cash position performs unexpectedly, Lisk 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 Lisk will offset losses from the drop in Lisk'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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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