Correlation Between BTM and USD Coin
Can any of the company-specific risk be diversified away by investing in both BTM and USD Coin 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 BTM and USD Coin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BTM and USD Coin, you can compare the effects of market volatilities on BTM and USD Coin 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 BTM with a short position of USD Coin. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTM and USD Coin.
Diversification Opportunities for BTM and USD Coin
Pay attention - limited upside
The 3 months correlation between BTM and USD is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BTM and USD Coin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USD Coin and BTM 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 BTM are associated (or correlated) with USD Coin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USD Coin has no effect on the direction of BTM i.e., BTM and USD Coin go up and down completely randomly.
Pair Corralation between BTM and USD Coin
Assuming the 90 days trading horizon BTM is expected to generate 34.49 times more return on investment than USD Coin. However, BTM is 34.49 times more volatile than USD Coin. It trades about 0.03 of its potential returns per unit of risk. USD Coin is currently generating about 0.0 per unit of risk. If you would invest 1.14 in BTM on January 19, 2024 and sell it today you would lose (0.21) from holding BTM or give up 18.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BTM vs. USD Coin
Performance |
| Timeline |
| BTM |
| USD Coin |
BTM and USD Coin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BTM and USD Coin
The main advantage of trading using opposite BTM and USD Coin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTM position performs unexpectedly, USD Coin 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 USD Coin will offset losses from the drop in USD Coin's long position.The idea behind BTM and USD Coin pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |