Correlation Between Bitcoin and WESTPAC CPS

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

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

Diversification Opportunities for Bitcoin and WESTPAC CPS

0.0

Correlation Coefficient

Bitcoin  WESTPAC CPS

Pay attention - limited upside

The 3 months correlation between Bitcoin and WESTPAC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and WESTPAC CPS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTPAC CPS 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 WESTPAC CPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTPAC CPS has no effect on the direction of Bitcoin i.e., Bitcoin and WESTPAC CPS go up and down completely randomly.

Pair Corralation between Bitcoin and WESTPAC CPS

If you would invest  2,325,278  in Bitcoin on October 26, 2024 and sell it today you would earn a total of  8,135,722  from holding Bitcoin or generate 349.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Bitcoin  vs.  WESTPAC CPS

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.

WESTPAC CPS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WESTPAC CPS has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound basic indicators, WESTPAC CPS is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bitcoin and WESTPAC CPS

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

The idea behind Bitcoin and WESTPAC CPS 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.