Correlation Between Embrace Change and Bitcoin Depot

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

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

Diversification Opportunities for Embrace Change and Bitcoin Depot

0.68

Correlation Coefficient

Embrace Change  Bitcoin Depot

Poor diversification

The 3 months correlation between Embrace and Bitcoin is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and Bitcoin Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin Depot and Embrace Change 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 Embrace Change Acquisition are associated (or correlated) with Bitcoin Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin Depot has no effect on the direction of Embrace Change i.e., Embrace Change and Bitcoin Depot go up and down completely randomly.

Pair Corralation between Embrace Change and Bitcoin Depot

Given the investment horizon of 90 days Embrace Change is expected to generate 162.23 times less return on investment than Bitcoin Depot. But when comparing it to its historical volatility, Embrace Change Acquisition is 71.98 times less risky than Bitcoin Depot. It trades about 0.08 of its potential returns per unit of risk. Bitcoin Depot is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3.17  in Bitcoin Depot on September 2, 2024 and sell it today you would earn a total of  5.60  from holding Bitcoin Depot or generate 176.66% return on investment over 90 days.

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

Embrace Change Acquisition  vs.  Bitcoin Depot

Embrace Change Acqui

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Embrace Change Acquisition are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Embrace Change is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Bitcoin Depot

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin Depot are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Bitcoin Depot showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Embrace Change and Bitcoin Depot

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

The idea behind Embrace Change Acquisition and Bitcoin Depot 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.