Correlation Between Bitcoin and Nissan

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

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

Diversification Opportunities for Bitcoin and Nissan

-0.18

Correlation Coefficient

Bitcoin  Nissan

Good diversification

The 3 months correlation between Bitcoin and Nissan is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Nissan Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nissan Motor 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 Nissan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nissan Motor has no effect on the direction of Bitcoin i.e., Bitcoin and Nissan go up and down completely randomly.

Pair Corralation between Bitcoin and Nissan

Assuming the 90 days trading horizon Bitcoin is expected to under-perform the Nissan. But the crypto coin apears to be less risky and, when comparing its historical volatility, Bitcoin is 2.33 times less risky than Nissan. The crypto coin trades about -0.07 of its potential returns per unit of risk. The Nissan Motor Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  284.00  in Nissan Motor Co on December 21, 2024 and sell it today you would earn a total of  7.00  from holding Nissan Motor Co or generate 2.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Bitcoin  vs.  Nissan Motor Co

Bitcoin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitcoin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Bitcoin shareholders.

Nissan Motor

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nissan Motor Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Nissan reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bitcoin and Nissan

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

The idea behind Bitcoin and Nissan Motor Co 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.