Correlation Between Bitcoin Cash and Waves
Can any of the company-specific risk be diversified away by investing in both Bitcoin Cash and Waves 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 Waves into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin Cash and Waves, you can compare the effects of market volatilities on Bitcoin Cash and Waves 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 Waves. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin Cash and Waves.
Diversification Opportunities for Bitcoin Cash and Waves
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bitcoin and Waves is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Cash and Waves in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waves 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 Waves. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waves has no effect on the direction of Bitcoin Cash i.e., Bitcoin Cash and Waves go up and down completely randomly.
Pair Corralation between Bitcoin Cash and Waves
Assuming the 90 days trading horizon Bitcoin Cash is expected to generate 1.14 times more return on investment than Waves. However, Bitcoin Cash is 1.14 times more volatile than Waves. It trades about 0.14 of its potential returns per unit of risk. Waves is currently generating about -0.23 per unit of risk. If you would invest 41,441 in Bitcoin Cash on January 20, 2024 and sell it today you would earn a total of 7,101 from holding Bitcoin Cash or generate 17.14% 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. Waves
Performance |
| Timeline |
| Bitcoin Cash |
| Waves |
Bitcoin Cash and Waves Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin Cash and Waves
The main advantage of trading using opposite Bitcoin Cash and Waves positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin Cash position performs unexpectedly, Waves 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 Waves will offset losses from the drop in Waves' 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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