Correlation Between Bitcoin SV and Stellar

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

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

Diversification Opportunities for Bitcoin SV and Stellar

0.88

Correlation Coefficient

Bitcoin SV  Stellar

Very poor diversification

The 3 months correlation between Bitcoin and Stellar is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin SV and Stellar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stellar and Bitcoin SV 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 Bitcoin SV are associated (or correlated) with Stellar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stellar has no effect on the direction of Bitcoin SV i.e., Bitcoin SV and Stellar go up and down completely randomly.

Pair Corralation between Bitcoin SV and Stellar

Assuming the 90 days trading horizon Bitcoin SV is expected to generate 0.99 times more return on investment than Stellar. However, Bitcoin SV is 1.01 times less risky than Stellar. It trades about 0.02 of its potential returns per unit of risk. Stellar is currently generating about 0.01 per unit of risk. If you would invest  7,815  in Bitcoin SV on January 17, 2024 and sell it today you would lose (1,154) from holding Bitcoin SV or give up 14.77% of portfolio value over 90 days.

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

Bitcoin SV  vs.  Stellar

Bitcoin SV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bitcoin SV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Bitcoin SV is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Stellar

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stellar are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Stellar may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Bitcoin SV and Stellar

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

The idea behind Bitcoin SV and Stellar 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.