Correlation Between Terawulf and Cipher Mining

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

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

Diversification Opportunities for Terawulf and Cipher Mining

0.74

Correlation Coefficient

Terawulf  Cipher Mining

Poor diversification

The 3 months correlation between Terawulf and Cipher is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Terawulf and Cipher Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cipher Mining and Terawulf 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 Terawulf are associated (or correlated) with Cipher Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cipher Mining has no effect on the direction of Terawulf i.e., Terawulf and Cipher Mining go up and down completely randomly.

Pair Corralation between Terawulf and Cipher Mining

Given the investment horizon of 90 days Terawulf is expected to under-perform the Cipher Mining. In addition to that, Terawulf is 1.01 times more volatile than Cipher Mining. It trades about -0.13 of its total potential returns per unit of risk. Cipher Mining is currently generating about -0.07 per unit of volatility. If you would invest  670.00  in Cipher Mining on November 28, 2024 and sell it today you would lose (252.00) from holding Cipher Mining or give up 37.61% of portfolio value over 90 days.

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

Terawulf  vs.  Cipher Mining

Terawulf

Risk-Adjusted Performance

Very Weak

Over the last 90 days Terawulf has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Cipher Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cipher Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Terawulf and Cipher Mining

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

The idea behind Terawulf and Cipher Mining 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.