Correlation Between Numeraire and Bitcoin SV

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

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

Diversification Opportunities for Numeraire and Bitcoin SV

0.76

Correlation Coefficient

Numeraire  Bitcoin SV

Poor diversification

The 3 months correlation between Numeraire and Bitcoin is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Numeraire and Bitcoin SV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin SV and Numeraire 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 Numeraire are associated (or correlated) with Bitcoin SV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin SV has no effect on the direction of Numeraire i.e., Numeraire and Bitcoin SV go up and down completely randomly.

Pair Corralation between Numeraire and Bitcoin SV

Assuming the 90 days trading horizon Numeraire is expected to generate 1.12 times more return on investment than Bitcoin SV. However, Numeraire is 1.12 times more volatile than Bitcoin SV. It trades about 0.18 of its potential returns per unit of risk. Bitcoin SV is currently generating about 0.19 per unit of risk. If you would invest  1,357  in Numeraire on September 1, 2024 and sell it today you would earn a total of  863.00  from holding Numeraire or generate 63.6% return on investment over 90 days.

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

Numeraire  vs.  Bitcoin SV

Numeraire

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Numeraire are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Numeraire exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bitcoin SV

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin SV are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Bitcoin SV exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Numeraire and Bitcoin SV

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

The idea behind Numeraire and Bitcoin SV 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.