Correlation Between Terawulf and Hut 8

Can any of the company-specific risk be diversified away by investing in both Terawulf and Hut 8 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 Terawulf and Hut 8 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Terawulf and Hut 8 Corp, you can compare the effects of market volatilities on Terawulf and Hut 8 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 Terawulf with a short position of Hut 8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Terawulf and Hut 8.

Diversification Opportunities for Terawulf and Hut 8

0.88

Correlation Coefficient

Terawulf  Hut 8

Very poor diversification

The 3 months correlation between Terawulf and Hut is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Terawulf and Hut 8 Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hut 8 Corp and Terawulf 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 Terawulf are associated (or correlated) with Hut 8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hut 8 Corp has no effect on the direction of Terawulf i.e., Terawulf and Hut 8 go up and down completely randomly.

Pair Corralation between Terawulf and Hut 8

Given the investment horizon of 90 days Terawulf is expected to generate 1.12 times less return on investment than Hut 8. In addition to that, Terawulf is 1.11 times more volatile than Hut 8 Corp. It trades about 0.22 of its total potential returns per unit of risk. Hut 8 Corp is currently generating about 0.27 per unit of volatility. If you would invest  900.00  in Hut 8 Corp on August 7, 2024 and sell it today you would earn a total of  656.00  from holding Hut 8 Corp or generate 72.89% return on investment over 90 days.

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

Terawulf  vs.  Hut 8 Corp

Terawulf

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Terawulf are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating essential indicators, Terawulf reported solid returns over the last few months and may actually be approaching a breakup point.

Hut 8 Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hut 8 Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Hut 8 unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Terawulf and Hut 8

The main advantage of trading using opposite Terawulf and Hut 8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Terawulf position performs unexpectedly, Hut 8 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 Hut 8 will offset losses from the drop in Hut 8's long position.

The idea behind Terawulf and Hut 8 Corp 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.

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 CEOs Directory module to screen CEOs from public companies around the world.