Correlation Between Bitcoin Gold and Arweave

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

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

Diversification Opportunities for Bitcoin Gold and Arweave

0.58

Correlation Coefficient

Bitcoin Gold  Arweave

Very weak diversification

The 3 months correlation between Bitcoin and Arweave is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Gold and Arweave in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arweave and Bitcoin Gold 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 Gold are associated (or correlated) with Arweave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arweave has no effect on the direction of Bitcoin Gold i.e., Bitcoin Gold and Arweave go up and down completely randomly.

Pair Corralation between Bitcoin Gold and Arweave

Assuming the 90 days trading horizon Bitcoin Gold is expected to generate 13.11 times more return on investment than Arweave. However, Bitcoin Gold is 13.11 times more volatile than Arweave. It trades about 0.19 of its potential returns per unit of risk. Arweave is currently generating about -0.15 per unit of risk. If you would invest  989.00  in Bitcoin Gold on December 30, 2024 and sell it today you would lose (954.00) from holding Bitcoin Gold or give up 96.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Bitcoin Gold  vs.  Arweave

Bitcoin Gold

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin Gold are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Bitcoin Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.

Arweave

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arweave has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Arweave shareholders.

Pair Trading with Bitcoin Gold and Arweave

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

The idea behind Bitcoin Gold and Arweave 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.