Correlation Between NMC and Bitcoin Gold

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

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

Diversification Opportunities for NMC and Bitcoin Gold

0.46

Correlation Coefficient

NMC  Bitcoin Gold

Very weak diversification

The 3 months correlation between NMC and Bitcoin is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding NMC and Bitcoin Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin Gold and NMC 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 NMC are associated (or correlated) with Bitcoin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin Gold has no effect on the direction of NMC i.e., NMC and Bitcoin Gold go up and down completely randomly.

Pair Corralation between NMC and Bitcoin Gold

Assuming the 90 days trading horizon NMC is expected to generate 0.13 times more return on investment than Bitcoin Gold. However, NMC is 7.52 times less risky than Bitcoin Gold. It trades about 0.03 of its potential returns per unit of risk. Bitcoin Gold is currently generating about -0.03 per unit of risk. If you would invest  100.00  in NMC on November 28, 2024 and sell it today you would earn a total of  4.00  from holding NMC or generate 4.0% return on investment over 90 days.

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

NMC  vs.  Bitcoin Gold

NMC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NMC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, NMC may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Bitcoin Gold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitcoin Gold 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 Crypto's technical and fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for Bitcoin Gold shareholders.

Pair Trading with NMC and Bitcoin Gold

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

The idea behind NMC and Bitcoin Gold 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.