Correlation Between Bitcoin and Starr Peak

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

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

Diversification Opportunities for Bitcoin and Starr Peak

-0.31

Correlation Coefficient

Bitcoin  Starr Peak

Very good diversification

The 3 months correlation between Bitcoin and Starr is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Starr Peak Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starr Peak Exploration 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 Starr Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starr Peak Exploration has no effect on the direction of Bitcoin i.e., Bitcoin and Starr Peak go up and down completely randomly.

Pair Corralation between Bitcoin and Starr Peak

Assuming the 90 days trading horizon Bitcoin is expected to generate 0.53 times more return on investment than Starr Peak. However, Bitcoin is 1.9 times less risky than Starr Peak. It trades about 0.21 of its potential returns per unit of risk. Starr Peak Exploration is currently generating about 0.1 per unit of risk. If you would invest  9,568,019  in Bitcoin on October 26, 2024 and sell it today you would earn a total of  845,981  from holding Bitcoin or generate 8.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Bitcoin  vs.  Starr Peak Exploration

Bitcoin

Risk-Adjusted Performance

15 of 100

Solid

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.

Starr Peak Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Starr Peak Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Starr Peak is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Bitcoin and Starr Peak

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

The idea behind Bitcoin and Starr Peak Exploration 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.