Correlation Between Argo Blockchain and Terawulf

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

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

Diversification Opportunities for Argo Blockchain and Terawulf

-0.4

Correlation Coefficient

Argo Blockchain  Terawulf

Very good diversification

The 3 months correlation between Argo and Terawulf is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Argo Blockchain PLC and Terawulf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terawulf and Argo Blockchain 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 Argo Blockchain PLC are associated (or correlated) with Terawulf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terawulf has no effect on the direction of Argo Blockchain i.e., Argo Blockchain and Terawulf go up and down completely randomly.

Pair Corralation between Argo Blockchain and Terawulf

Assuming the 90 days horizon Argo Blockchain PLC is expected to under-perform the Terawulf. In addition to that, Argo Blockchain is 1.53 times more volatile than Terawulf. It trades about -0.13 of its total potential returns per unit of risk. Terawulf is currently generating about 0.01 per unit of volatility. If you would invest  699.00  in Terawulf on September 22, 2024 and sell it today you would lose (38.00) from holding Terawulf or give up 5.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Argo Blockchain PLC  vs.  Terawulf

Argo Blockchain PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Argo Blockchain PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Terawulf

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Terawulf are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal essential indicators, Terawulf reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Argo Blockchain and Terawulf

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

The idea behind Argo Blockchain PLC and Terawulf 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.