Correlation Between Bittensor and NAS

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

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

Diversification Opportunities for Bittensor and NAS

0.18

Correlation Coefficient

Bittensor  NAS

Average diversification

The 3 months correlation between Bittensor and NAS is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Bittensor and NAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAS and Bittensor 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 Bittensor are associated (or correlated) with NAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAS has no effect on the direction of Bittensor i.e., Bittensor and NAS go up and down completely randomly.

Pair Corralation between Bittensor and NAS

Assuming the 90 days trading horizon Bittensor is expected to generate 3.09 times more return on investment than NAS. However, Bittensor is 3.09 times more volatile than NAS. It trades about -0.06 of its potential returns per unit of risk. NAS is currently generating about -0.31 per unit of risk. If you would invest  39,382  in Bittensor on December 2, 2024 and sell it today you would lose (5,685) from holding Bittensor or give up 14.44% of portfolio value over 90 days.

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

Bittensor  vs.  NAS

Bittensor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bittensor 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 basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Bittensor shareholders.

NAS

Risk-Adjusted Performance

OK

Over the last 90 days NAS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for NAS shareholders.

Pair Trading with Bittensor and NAS

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

The idea behind Bittensor and NAS 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.