Correlation Between Bitcoin and Gevo

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

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

Diversification Opportunities for Bitcoin and Gevo

0.53

Correlation Coefficient

Bitcoin  Gevo

Very weak diversification

The 3 months correlation between Bitcoin and Gevo is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Gevo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gevo Inc 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 Gevo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gevo Inc has no effect on the direction of Bitcoin i.e., Bitcoin and Gevo go up and down completely randomly.

Pair Corralation between Bitcoin and Gevo

Assuming the 90 days trading horizon Bitcoin is expected to under-perform the Gevo. But the crypto coin apears to be less risky and, when comparing its historical volatility, Bitcoin is 3.62 times less risky than Gevo. The crypto coin trades about -0.07 of its potential returns per unit of risk. The Gevo Inc is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  144.00  in Gevo Inc on December 21, 2024 and sell it today you would lose (25.00) from holding Gevo Inc or give up 17.36% of portfolio value over 90 days.

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

Bitcoin  vs.  Gevo Inc

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.

Gevo Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gevo Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Gevo is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bitcoin and Gevo

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

The idea behind Bitcoin and Gevo Inc 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.