Correlation Between Bitcoin and BAXALTA

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

By analyzing existing cross correlation between Bitcoin and BAXALTA INC 525, you can compare the effects of market volatilities on Bitcoin and BAXALTA 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 BAXALTA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin and BAXALTA.

Diversification Opportunities for Bitcoin and BAXALTA

-0.46

Correlation Coefficient

Bitcoin  BAXALTA

Very good diversification

The 3 months correlation between Bitcoin and BAXALTA is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and BAXALTA INC 525 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAXALTA INC 525 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 BAXALTA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAXALTA INC 525 has no effect on the direction of Bitcoin i.e., Bitcoin and BAXALTA go up and down completely randomly.

Pair Corralation between Bitcoin and BAXALTA

Assuming the 90 days trading horizon Bitcoin is expected to generate 18.06 times less return on investment than BAXALTA. But when comparing it to its historical volatility, Bitcoin is 14.24 times less risky than BAXALTA. It trades about 0.08 of its potential returns per unit of risk. BAXALTA INC 525 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  10,020  in BAXALTA INC 525 on October 11, 2024 and sell it today you would lose (227.00) from holding BAXALTA INC 525 or give up 2.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	73.06%
Values	Daily Returns

Bitcoin  vs.  BAXALTA INC 525

Bitcoin

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin are ranked lower than 16 (%) 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.

BAXALTA INC 525

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BAXALTA INC 525 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BAXALTA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bitcoin and BAXALTA

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

The idea behind Bitcoin and BAXALTA INC 525 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.