Correlation Between Hut 8 and ARC Resources
Can any of the company-specific risk be diversified away by investing in both Hut 8 and ARC Resources 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 Hut 8 and ARC Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hut 8 Mining and ARC Resources, you can compare the effects of market volatilities on Hut 8 and ARC Resources 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 Hut 8 with a short position of ARC Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hut 8 and ARC Resources.
Diversification Opportunities for Hut 8 and ARC Resources
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hut and ARC is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Hut 8 Mining and ARC Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARC Resources and Hut 8 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 Hut 8 Mining are associated (or correlated) with ARC Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARC Resources has no effect on the direction of Hut 8 i.e., Hut 8 and ARC Resources go up and down completely randomly.
Pair Corralation between Hut 8 and ARC Resources
Assuming the 90 days trading horizon Hut 8 Mining is expected to generate 3.55 times more return on investment than ARC Resources. However, Hut 8 is 3.55 times more volatile than ARC Resources. It trades about 0.11 of its potential returns per unit of risk. ARC Resources is currently generating about 0.01 per unit of risk. If you would invest 1,708 in Hut 8 Mining on September 22, 2024 and sell it today you would earn a total of 1,692 from holding Hut 8 Mining or generate 99.06% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Hut 8 Mining vs. ARC Resources
Performance |
Timeline |
Hut 8 Mining |
ARC Resources |
Hut 8 and ARC Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hut 8 and ARC Resources
The main advantage of trading using opposite Hut 8 and ARC Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hut 8 position performs unexpectedly, ARC Resources 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 ARC Resources will offset losses from the drop in ARC Resources' long position.Hut 8 vs. HIVE Blockchain Technologies | Hut 8 vs. Dmg Blockchain Solutions | Hut 8 vs. Galaxy Digital Holdings | Hut 8 vs. CryptoStar Corp |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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