Correlation Between Bitcoin and XEM

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

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

Diversification Opportunities for Bitcoin and XEM

-0.66

Correlation Coefficient

Bitcoin  XEM

Excellent diversification

The 3 months correlation between Bitcoin and XEM is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and XEM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XEM 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 XEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XEM has no effect on the direction of Bitcoin i.e., Bitcoin and XEM go up and down completely randomly.

Pair Corralation between Bitcoin and XEM

Assuming the 90 days trading horizon Bitcoin is expected to generate 0.06 times more return on investment than XEM. However, Bitcoin is 15.89 times less risky than XEM. It trades about 0.21 of its potential returns per unit of risk. XEM is currently generating about 0.0 per unit of risk. If you would invest  9,348,330  in Bitcoin on April 20, 2025 and sell it today you would earn a total of  2,436,370  from holding Bitcoin or generate 26.06% return on investment over 90 days.

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

Bitcoin  vs.  XEM

Bitcoin

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin are ranked lower than 16 (%) 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.

XEM

Risk-Adjusted Performance

Very Weak

Over the last 90 days XEM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unsteady primary indicators, XEM may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Bitcoin and XEM

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

The idea behind Bitcoin and XEM 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.