Correlation Between North American and Hut 8
Can any of the company-specific risk be diversified away by investing in both North American and Hut 8 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 North American and Hut 8 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North American Financial and Hut 8 Mining, you can compare the effects of market volatilities on North American and Hut 8 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 North American with a short position of Hut 8. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and Hut 8.
Diversification Opportunities for North American and Hut 8
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between North and Hut is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding North American Financial and Hut 8 Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hut 8 Mining and North American 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 North American Financial are associated (or correlated) with Hut 8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hut 8 Mining has no effect on the direction of North American i.e., North American and Hut 8 go up and down completely randomly.
Pair Corralation between North American and Hut 8
Assuming the 90 days trading horizon North American Financial is expected to generate 0.34 times more return on investment than Hut 8. However, North American Financial is 2.94 times less risky than Hut 8. It trades about -0.06 of its potential returns per unit of risk. Hut 8 Mining is currently generating about -0.13 per unit of risk. If you would invest 668.00 in North American Financial on December 20, 2024 and sell it today you would lose (57.00) from holding North American Financial or give up 8.53% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
North American Financial vs. Hut 8 Mining
Performance |
Timeline |
North American Financial |
Hut 8 Mining |
North American and Hut 8 Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with North American and Hut 8
The main advantage of trading using opposite North American and Hut 8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American position performs unexpectedly, Hut 8 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 Hut 8 will offset losses from the drop in Hut 8's long position.North American vs. Dividend Growth Split | North American vs. Dividend 15 Split | North American vs. Financial 15 Split | North American vs. Dividend 15 Split |
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Check out your portfolio center.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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