Correlation Between BTT and JUST

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

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

Diversification Opportunities for BTT and JUST

0.75

Correlation Coefficient

BTT  JUST

Poor diversification

The 3 months correlation between BTT and JUST is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding BTT and JUST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JUST and BTT 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 BTT are associated (or correlated) with JUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JUST has no effect on the direction of BTT i.e., BTT and JUST go up and down completely randomly.

Pair Corralation between BTT and JUST

Assuming the 90 days trading horizon BTT is expected to generate 1.54 times more return on investment than JUST. However, BTT is 1.54 times more volatile than JUST. It trades about -0.12 of its potential returns per unit of risk. JUST is currently generating about -0.26 per unit of risk. If you would invest  0.00  in BTT on December 1, 2024 and sell it today you would lose  0.00  from holding BTT or give up 50.0% of portfolio value over 90 days.

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

BTT  vs.  JUST

BTT

Risk-Adjusted Performance

Very Weak

Over the last 90 days BTT 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 basic 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 BTT shareholders.

JUST

Risk-Adjusted Performance

Very Weak

Over the last 90 days JUST 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 basic 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 JUST shareholders.

Pair Trading with BTT and JUST

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

The idea behind BTT and JUST 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..