Correlation Between Bitfarms and Short Duration

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

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

Diversification Opportunities for Bitfarms and Short Duration

0.01

Correlation Coefficient

Bitfarms  Short Duration

Significant diversification

The 3 months correlation between Bitfarms and Short is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Bitfarms and Short Duration Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Duration Municipal and Bitfarms 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 Bitfarms are associated (or correlated) with Short Duration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Duration Municipal has no effect on the direction of Bitfarms i.e., Bitfarms and Short Duration go up and down completely randomly.

Pair Corralation between Bitfarms and Short Duration

Given the investment horizon of 90 days Bitfarms is expected to generate 66.54 times more return on investment than Short Duration. However, Bitfarms is 66.54 times more volatile than Short Duration Municipal. It trades about 0.08 of its potential returns per unit of risk. Short Duration Municipal is currently generating about 0.23 per unit of risk. If you would invest  103.00  in Bitfarms on May 1, 2025 and sell it today you would earn a total of  21.00  from holding Bitfarms or generate 20.39% return on investment over 90 days.

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

Bitfarms  vs.  Short Duration Municipal

Bitfarms

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bitfarms are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Bitfarms reported solid returns over the last few months and may actually be approaching a breakup point.

Short Duration Municipal

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Short Duration Municipal are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Short Duration is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bitfarms and Short Duration

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

The idea behind Bitfarms and Short Duration Municipal 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 Stocks Directory module to find actively traded stocks across global markets.