Correlation Between Bitcoin and Willdan

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

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

Diversification Opportunities for Bitcoin and Willdan

-0.6

Correlation Coefficient

Bitcoin  Willdan

Excellent diversification

The 3 months correlation between Bitcoin and Willdan is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Willdan Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willdan Group 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 Willdan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willdan Group has no effect on the direction of Bitcoin i.e., Bitcoin and Willdan go up and down completely randomly.

Pair Corralation between Bitcoin and Willdan

Assuming the 90 days trading horizon Bitcoin is expected to generate 1.6 times more return on investment than Willdan. However, Bitcoin is 1.6 times more volatile than Willdan Group. It trades about -0.02 of its potential returns per unit of risk. Willdan Group is currently generating about -0.45 per unit of risk. If you would invest  9,665,788  in Bitcoin on October 10, 2024 and sell it today you would lose (164,794) from holding Bitcoin or give up 1.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Bitcoin  vs.  Willdan Group

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.

Willdan Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Willdan Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Bitcoin and Willdan

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

The idea behind Bitcoin and Willdan Group 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.