Correlation Between Wrapped Bitcoin and NEBL

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

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

Diversification Opportunities for Wrapped Bitcoin and NEBL

-0.13

Correlation Coefficient

Wrapped Bitcoin  NEBL

Good diversification

The 3 months correlation between Wrapped and NEBL is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Wrapped Bitcoin and NEBL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEBL and Wrapped Bitcoin 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 Wrapped Bitcoin are associated (or correlated) with NEBL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEBL has no effect on the direction of Wrapped Bitcoin i.e., Wrapped Bitcoin and NEBL go up and down completely randomly.

Pair Corralation between Wrapped Bitcoin and NEBL

Assuming the 90 days trading horizon Wrapped Bitcoin is expected to under-perform the NEBL. But the crypto coin apears to be less risky and, when comparing its historical volatility, Wrapped Bitcoin is 51.82 times less risky than NEBL. The crypto coin trades about -0.07 of its potential returns per unit of risk. The NEBL is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.77  in NEBL on December 30, 2024 and sell it today you would earn a total of  8.20  from holding NEBL or generate 1061.17% return on investment over 90 days.

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

Wrapped Bitcoin  vs.  NEBL

Wrapped Bitcoin

Risk-Adjusted Performance

Very Weak

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

NEBL

Risk-Adjusted Performance

OK

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

Pair Trading with Wrapped Bitcoin and NEBL

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

The idea behind Wrapped Bitcoin and NEBL 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.