Correlation Between Moelis and Bitfarms

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Can any of the company-specific risk be diversified away by investing in both Moelis and Bitfarms 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 Moelis and Bitfarms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Moelis Co and Bitfarms, you can compare the effects of market volatilities on Moelis and Bitfarms 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 Moelis with a short position of Bitfarms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moelis and Bitfarms.

Diversification Opportunities for Moelis and Bitfarms

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Moelis and Bitfarms is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Moelis Co and Bitfarms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitfarms and Moelis 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 Moelis Co are associated (or correlated) with Bitfarms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitfarms has no effect on the direction of Moelis i.e., Moelis and Bitfarms go up and down completely randomly.

Pair Corralation between Moelis and Bitfarms

Allowing for the 90-day total investment horizon Moelis is expected to generate 1.37 times less return on investment than Bitfarms. But when comparing it to its historical volatility, Moelis Co is 2.11 times less risky than Bitfarms. It trades about 0.12 of its potential returns per unit of risk. Bitfarms is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  179.00  in Bitfarms on September 6, 2024 and sell it today you would earn a total of  35.00  from holding Bitfarms or generate 19.55% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Moelis Co  vs.  Bitfarms

 Performance 
       Timeline  
Moelis 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Moelis Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Moelis exhibited solid returns over the last few months and may actually be approaching a breakup point.
Bitfarms 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Bitfarms are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Bitfarms reported solid returns over the last few months and may actually be approaching a breakup point.

Moelis and Bitfarms Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Moelis and Bitfarms

The main advantage of trading using opposite Moelis and Bitfarms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moelis position performs unexpectedly, Bitfarms 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 Bitfarms will offset losses from the drop in Bitfarms' long position.
The idea behind Moelis Co and Bitfarms 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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