Correlation Between Bitcoin Gold and Numeraire
Can any of the company-specific risk be diversified away by investing in both Bitcoin Gold and Numeraire 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 Numeraire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin Gold and Numeraire, you can compare the effects of market volatilities on Bitcoin Gold and Numeraire 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 Numeraire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin Gold and Numeraire.
Diversification Opportunities for Bitcoin Gold and Numeraire
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bitcoin and Numeraire is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Gold and Numeraire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Numeraire 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 Numeraire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Numeraire has no effect on the direction of Bitcoin Gold i.e., Bitcoin Gold and Numeraire go up and down completely randomly.
Pair Corralation between Bitcoin Gold and Numeraire
Assuming the 90 days trading horizon Bitcoin Gold is expected to generate 0.68 times more return on investment than Numeraire. However, Bitcoin Gold is 1.46 times less risky than Numeraire. It trades about 0.09 of its potential returns per unit of risk. Numeraire is currently generating about 0.05 per unit of risk. If you would invest 1,454 in Bitcoin Gold on January 20, 2024 and sell it today you would earn a total of 1,791 from holding Bitcoin Gold or generate 123.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bitcoin Gold vs. Numeraire
Performance |
| Timeline |
| Bitcoin Gold |
| Numeraire |
Bitcoin Gold and Numeraire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin Gold and Numeraire
The main advantage of trading using opposite Bitcoin Gold and Numeraire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin Gold position performs unexpectedly, Numeraire 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 Numeraire will offset losses from the drop in Numeraire'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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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