Correlation Between Bitcoin Gold and NEXO
Can any of the company-specific risk be diversified away by investing in both Bitcoin Gold and NEXO 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 Gold and NEXO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin Gold and NEXO, you can compare the effects of market volatilities on Bitcoin Gold and NEXO 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 Gold with a short position of NEXO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin Gold and NEXO.
Diversification Opportunities for Bitcoin Gold and NEXO
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bitcoin and NEXO is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Gold and NEXO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXO and Bitcoin Gold 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 Gold are associated (or correlated) with NEXO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXO has no effect on the direction of Bitcoin Gold i.e., Bitcoin Gold and NEXO go up and down completely randomly.
Pair Corralation between Bitcoin Gold and NEXO
Assuming the 90 days trading horizon Bitcoin Gold is expected to under-perform the NEXO. In addition to that, Bitcoin Gold is 1.42 times more volatile than NEXO. It trades about -0.17 of its total potential returns per unit of risk. NEXO is currently generating about -0.12 per unit of volatility. If you would invest 134.00 in NEXO on January 20, 2024 and sell it today you would lose (13.00) from holding NEXO or give up 9.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bitcoin Gold vs. NEXO
Performance |
| Timeline |
| Bitcoin Gold |
| NEXO |
Bitcoin Gold and NEXO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin Gold and NEXO
The main advantage of trading using opposite Bitcoin Gold and NEXO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin Gold position performs unexpectedly, NEXO 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 NEXO will offset losses from the drop in NEXO's long position.| Bitcoin Gold vs. Bitcoin | Bitcoin Gold vs. Dogecoin | Bitcoin Gold vs. Bitcoin Cash | Bitcoin Gold vs. Litecoin |
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 Stocks Directory module to find actively traded stocks across global markets.
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