Correlation Between Bitcoin SV and FIRO

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

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

Diversification Opportunities for Bitcoin SV and FIRO

0.92

Correlation Coefficient

Bitcoin SV  FIRO

Almost no diversification

The 3 months correlation between Bitcoin and FIRO is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin SV and FIRO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRO and Bitcoin SV 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 Bitcoin SV are associated (or correlated) with FIRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRO has no effect on the direction of Bitcoin SV i.e., Bitcoin SV and FIRO go up and down completely randomly.

Pair Corralation between Bitcoin SV and FIRO

Assuming the 90 days trading horizon Bitcoin SV is expected to generate 1.21 times more return on investment than FIRO. However, Bitcoin SV is 1.21 times more volatile than FIRO. It trades about -0.11 of its potential returns per unit of risk. FIRO is currently generating about -0.28 per unit of risk. If you would invest  5,034  in Bitcoin SV on December 30, 2024 and sell it today you would lose (1,896) from holding Bitcoin SV or give up 37.66% of portfolio value over 90 days.

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

Bitcoin SV  vs.  FIRO

Bitcoin SV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitcoin SV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Bitcoin SV shareholders.

FIRO

Risk-Adjusted Performance

Very Weak

Over the last 90 days FIRO has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for FIRO shareholders.

Pair Trading with Bitcoin SV and FIRO

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

The idea behind Bitcoin SV and FIRO 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.