Correlation Between Bitcoin and KODEX Metaverse

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

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

Diversification Opportunities for Bitcoin and KODEX Metaverse

0.86

Correlation Coefficient

Bitcoin  KODEX Metaverse

Very poor diversification

The 3 months correlation between Bitcoin and KODEX is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and KODEX Metaverse Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KODEX Metaverse Nasdaq and Bitcoin 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 are associated (or correlated) with KODEX Metaverse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KODEX Metaverse Nasdaq has no effect on the direction of Bitcoin i.e., Bitcoin and KODEX Metaverse go up and down completely randomly.

Pair Corralation between Bitcoin and KODEX Metaverse

Assuming the 90 days trading horizon Bitcoin is expected to generate 1.31 times more return on investment than KODEX Metaverse. However, Bitcoin is 1.31 times more volatile than KODEX Metaverse Nasdaq. It trades about 0.13 of its potential returns per unit of risk. KODEX Metaverse Nasdaq is currently generating about 0.12 per unit of risk. If you would invest  9,190,389  in Bitcoin on October 26, 2024 and sell it today you would earn a total of  1,223,611  from holding Bitcoin or generate 13.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.35%
Values	Daily Returns

Bitcoin  vs.  KODEX Metaverse Nasdaq

Bitcoin

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Bitcoin exhibited solid returns over the last few months and may actually be approaching a breakup point.

KODEX Metaverse Nasdaq

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KODEX Metaverse Nasdaq are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KODEX Metaverse sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bitcoin and KODEX Metaverse

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

The idea behind Bitcoin and KODEX Metaverse Nasdaq 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.