Correlation Between Hedera Hashgraph and BCD
Can any of the company-specific risk be diversified away by investing in both Hedera Hashgraph and BCD 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 Hedera Hashgraph and BCD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hedera Hashgraph and BCD, you can compare the effects of market volatilities on Hedera Hashgraph and BCD 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 Hedera Hashgraph with a short position of BCD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hedera Hashgraph and BCD.
Diversification Opportunities for Hedera Hashgraph and BCD
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hedera and BCD is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hedera Hashgraph and BCD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCD and Hedera Hashgraph 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 Hedera Hashgraph are associated (or correlated) with BCD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCD has no effect on the direction of Hedera Hashgraph i.e., Hedera Hashgraph and BCD go up and down completely randomly.
Pair Corralation between Hedera Hashgraph and BCD
Assuming the 90 days trading horizon Hedera Hashgraph is expected to generate 4.43 times less return on investment than BCD. But when comparing it to its historical volatility, Hedera Hashgraph is 1.97 times less risky than BCD. It trades about 0.09 of its potential returns per unit of risk. BCD is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 9.06 in BCD on December 29, 2023 and sell it today you would earn a total of 4.94 from holding BCD or generate 54.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Hedera Hashgraph vs. BCD
Performance |
Timeline |
Hedera Hashgraph |
BCD |
Hedera Hashgraph and BCD Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hedera Hashgraph and BCD
The main advantage of trading using opposite Hedera Hashgraph and BCD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hedera Hashgraph position performs unexpectedly, BCD 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 BCD will offset losses from the drop in BCD's long position.Hedera Hashgraph vs. Solana | Hedera Hashgraph vs. XRP | Hedera Hashgraph vs. Staked Ether | Hedera Hashgraph vs. Cardano |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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