Correlation Between CleanSpark and Large Cap

Can any of the company-specific risk be diversified away by investing in both CleanSpark and Large Cap 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 CleanSpark and Large Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CleanSpark and Large Cap Equity, you can compare the effects of market volatilities on CleanSpark and Large Cap 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 CleanSpark with a short position of Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of CleanSpark and Large Cap.

Diversification Opportunities for CleanSpark and Large Cap

0.72

Correlation Coefficient

CleanSpark  Large Cap

Poor diversification

The 3 months correlation between CleanSpark and Large is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding CleanSpark and Large Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Equity and CleanSpark 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 CleanSpark are associated (or correlated) with Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap Equity has no effect on the direction of CleanSpark i.e., CleanSpark and Large Cap go up and down completely randomly.

Pair Corralation between CleanSpark and Large Cap

Given the investment horizon of 90 days CleanSpark is expected to generate 11.69 times more return on investment than Large Cap. However, CleanSpark is 11.69 times more volatile than Large Cap Equity. It trades about 0.08 of its potential returns per unit of risk. Large Cap Equity is currently generating about 0.01 per unit of risk. If you would invest  1,672  in CleanSpark on January 30, 2024 and sell it today you would earn a total of  251.00  from holding CleanSpark or generate 15.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

CleanSpark  vs.  Large Cap Equity

CleanSpark

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CleanSpark are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, CleanSpark disclosed solid returns over the last few months and may actually be approaching a breakup point.

Large Cap Equity

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Large Cap Equity are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Large Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CleanSpark and Large Cap

The main advantage of trading using opposite CleanSpark and Large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CleanSpark position performs unexpectedly, Large Cap 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 Large Cap will offset losses from the drop in Large Cap's long position.

The idea behind CleanSpark and Large Cap Equity 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.