Correlation Between Bitcoin and Metals X

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

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

Diversification Opportunities for Bitcoin and Metals X

-0.54

Correlation Coefficient

Bitcoin  Metals X

Excellent diversification

The 3 months correlation between Bitcoin and Metals is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Metals X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals X and 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 Bitcoin are associated (or correlated) with Metals X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals X has no effect on the direction of Bitcoin i.e., Bitcoin and Metals X go up and down completely randomly.

Pair Corralation between Bitcoin and Metals X

Assuming the 90 days trading horizon Bitcoin is expected to generate 2.4 times less return on investment than Metals X. But when comparing it to its historical volatility, Bitcoin is 1.53 times less risky than Metals X. It trades about 0.07 of its potential returns per unit of risk. Metals X is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  52.00  in Metals X on April 7, 2025 and sell it today you would earn a total of  3.00  from holding Metals X or generate 5.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Bitcoin  vs.  Metals X

Bitcoin

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Bitcoin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Metals X

Risk-Adjusted Performance

Very Weak

Over the last 90 days Metals X has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Metals X is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bitcoin and Metals X

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

The idea behind Bitcoin and Metals X 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.