Correlation Between Bittensor and Virtual Protocol

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

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

Diversification Opportunities for Bittensor and Virtual Protocol

0.62

Correlation Coefficient

Bittensor  Virtual Protocol

Poor diversification

The 3 months correlation between Bittensor and Virtual is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bittensor and Virtual Protocol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtual 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 Virtual Protocol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtual Protocol has no effect on the direction of Bittensor i.e., Bittensor and Virtual Protocol go up and down completely randomly.

Pair Corralation between Bittensor and Virtual Protocol

Assuming the 90 days trading horizon Bittensor is expected to generate 0.76 times more return on investment than Virtual Protocol. However, Bittensor is 1.31 times less risky than Virtual Protocol. It trades about -0.04 of its potential returns per unit of risk. Virtual Protocol is currently generating about -0.07 per unit of risk. If you would invest  47,006  in Bittensor on May 20, 2025 and sell it today you would lose (9,579) from holding Bittensor or give up 20.38% of portfolio value over 90 days.

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

Bittensor  vs.  Virtual 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 weak 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.

Virtual Protocol

Risk-Adjusted Performance

Weakest

Over the last 90 days Virtual Protocol has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Crypto's basic indicators remain quite persistent which may send shares a bit higher in September 2025. The latest mess may also be a sign of long-standing up-swing for Virtual Protocol institutional investors.

Pair Trading with Bittensor and Virtual Protocol

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

The idea behind Bittensor and Virtual 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.