Correlation Between Bitcoin Gold and REP

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Can any of the company-specific risk be diversified away by investing in both Bitcoin Gold and REP 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 Gold and REP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin Gold and REP, you can compare the effects of market volatilities on Bitcoin Gold and REP 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 Gold with a short position of REP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin Gold and REP.

Diversification Opportunities for Bitcoin Gold and REP

0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Bitcoin and REP is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Gold and REP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REP and Bitcoin Gold 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 Gold are associated (or correlated) with REP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REP has no effect on the direction of Bitcoin Gold i.e., Bitcoin Gold and REP go up and down completely randomly.

Pair Corralation between Bitcoin Gold and REP

Assuming the 90 days trading horizon Bitcoin Gold is expected to generate 1.12 times less return on investment than REP. But when comparing it to its historical volatility, Bitcoin Gold is 4.51 times less risky than REP. It trades about 0.11 of its potential returns per unit of risk. REP is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  805.00  in REP on December 30, 2023 and sell it today you would lose (673.00) from holding REP or give up 83.6% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Bitcoin Gold  vs.  REP

 Performance 
       Timeline  
Bitcoin Gold 

Risk-Adjusted Performance

20 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin Gold are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Bitcoin Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.
REP 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in REP are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, REP exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bitcoin Gold and REP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bitcoin Gold and REP

The main advantage of trading using opposite Bitcoin Gold and REP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin Gold position performs unexpectedly, REP 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 REP will offset losses from the drop in REP's long position.
The idea behind Bitcoin Gold and REP 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.
Check out your portfolio center.
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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