Correlation Between Bittensor and DeepBook Protocol

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

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

Diversification Opportunities for Bittensor and DeepBook Protocol

0.8

Correlation Coefficient

Bittensor  DeepBook Protocol

Very poor diversification

The 3 months correlation between Bittensor and DeepBook is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Bittensor and DeepBook Protocol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DeepBook Protocol and Bittensor 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 Bittensor are associated (or correlated) with DeepBook Protocol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DeepBook Protocol has no effect on the direction of Bittensor i.e., Bittensor and DeepBook Protocol go up and down completely randomly.

Pair Corralation between Bittensor and DeepBook Protocol

Assuming the 90 days trading horizon Bittensor is expected to generate 0.82 times more return on investment than DeepBook Protocol. However, Bittensor is 1.21 times less risky than DeepBook Protocol. It trades about -0.03 of its potential returns per unit of risk. DeepBook Protocol is currently generating about -0.02 per unit of risk. If you would invest  46,213  in Bittensor on May 11, 2025 and sell it today you would lose (8,619) from holding Bittensor or give up 18.65% of portfolio value over 90 days.

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

Bittensor  vs.  DeepBook Protocol

Bittensor

Risk-Adjusted Performance

Weakest

Over the last 90 days Bittensor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Bittensor shareholders.

DeepBook Protocol

Risk-Adjusted Performance

Weakest

Over the last 90 days DeepBook Protocol has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for DeepBook Protocol shareholders.

Pair Trading with Bittensor and DeepBook Protocol

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

The idea behind Bittensor and DeepBook Protocol 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.