Correlation Between Bitcoin Cash and Decentraland
Can any of the company-specific risk be diversified away by investing in both Bitcoin Cash and Decentraland 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 Decentraland into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin Cash and Decentraland, you can compare the effects of market volatilities on Bitcoin Cash and Decentraland 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 Decentraland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin Cash and Decentraland.
Diversification Opportunities for Bitcoin Cash and Decentraland
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bitcoin and Decentraland is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Cash and Decentraland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Decentraland 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 Decentraland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Decentraland has no effect on the direction of Bitcoin Cash i.e., Bitcoin Cash and Decentraland go up and down completely randomly.
Pair Corralation between Bitcoin Cash and Decentraland
Assuming the 90 days trading horizon Bitcoin Cash is expected to generate 1.05 times more return on investment than Decentraland. However, Bitcoin Cash is 1.05 times more volatile than Decentraland. It trades about -0.01 of its potential returns per unit of risk. Decentraland is currently generating about -0.23 per unit of risk. If you would invest 53,880 in Bitcoin Cash on January 26, 2024 and sell it today you would lose (3,392) from holding Bitcoin Cash or give up 6.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bitcoin Cash vs. Decentraland
Performance |
| Timeline |
| Bitcoin Cash |
| Decentraland |
Bitcoin Cash and Decentraland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin Cash and Decentraland
The main advantage of trading using opposite Bitcoin Cash and Decentraland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin Cash position performs unexpectedly, Decentraland 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 Decentraland will offset losses from the drop in Decentraland's long position.| Bitcoin Cash vs. Bitcoin | Bitcoin Cash vs. Dogecoin | Bitcoin Cash vs. Litecoin | Bitcoin Cash vs. Ethereum Classic |
| Decentraland vs. Solana | Decentraland vs. XRP | Decentraland vs. Staked Ether | Decentraland vs. The Open Network |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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