Correlation Between BTC Digital and Rollins

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

By analyzing existing cross correlation between BTC Digital and Rollins, you can compare the effects of market volatilities on BTC Digital and Rollins 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 BTC Digital with a short position of Rollins. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTC Digital and Rollins.

Diversification Opportunities for BTC Digital and Rollins

0.36

Correlation Coefficient

BTC Digital  Rollins

Weak diversification

The 3 months correlation between BTC and Rollins is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding BTC Digital and Rollins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rollins and BTC Digital 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 BTC Digital are associated (or correlated) with Rollins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rollins has no effect on the direction of BTC Digital i.e., BTC Digital and Rollins go up and down completely randomly.

Pair Corralation between BTC Digital and Rollins

Assuming the 90 days horizon BTC Digital is expected to generate 26.63 times more return on investment than Rollins. However, BTC Digital is 26.63 times more volatile than Rollins. It trades about 0.16 of its potential returns per unit of risk. Rollins is currently generating about -0.07 per unit of risk. If you would invest  1.80  in BTC Digital on October 8, 2024 and sell it today you would earn a total of  2.55  from holding BTC Digital or generate 141.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.32%
Values	Daily Returns

BTC Digital  vs.  Rollins

BTC Digital

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BTC Digital are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, BTC Digital showed solid returns over the last few months and may actually be approaching a breakup point.

Rollins

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rollins has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Rollins is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with BTC Digital and Rollins

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

The idea behind BTC Digital and Rollins 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.