Correlation Between Hut 8 and Terawulf

Can any of the company-specific risk be diversified away by investing in both Hut 8 and Terawulf 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 Terawulf into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hut 8 Corp and Terawulf, you can compare the effects of market volatilities on Hut 8 and Terawulf 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 Terawulf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hut 8 and Terawulf.

Diversification Opportunities for Hut 8 and Terawulf

0.93

Correlation Coefficient

Hut 8  Terawulf

Almost no diversification

The 3 months correlation between Hut and Terawulf is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Hut 8 Corp and Terawulf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terawulf 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 Corp are associated (or correlated) with Terawulf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terawulf has no effect on the direction of Hut 8 i.e., Hut 8 and Terawulf go up and down completely randomly.

Pair Corralation between Hut 8 and Terawulf

Considering the 90-day investment horizon Hut 8 Corp is expected to under-perform the Terawulf. But the stock apears to be less risky and, when comparing its historical volatility, Hut 8 Corp is 1.29 times less risky than Terawulf. The stock trades about -0.12 of its potential returns per unit of risk. The Terawulf is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  532.00  in Terawulf on December 28, 2024 and sell it today you would lose (241.00) from holding Terawulf or give up 45.3% of portfolio value over 90 days.

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

Hut 8 Corp  vs.  Terawulf

Hut 8 Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hut 8 Corp 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 Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Terawulf

Risk-Adjusted Performance

Very Weak

Over the last 90 days Terawulf has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Hut 8 and Terawulf

The main advantage of trading using opposite Hut 8 and Terawulf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hut 8 position performs unexpectedly, Terawulf 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 Terawulf will offset losses from the drop in Terawulf's long position.

The idea behind Hut 8 Corp and Terawulf 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.