Correlation Between Bitcoin Gold and True USD

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

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

Diversification Opportunities for Bitcoin Gold and True USD

0.71

Correlation Coefficient

Bitcoin Gold  True USD

Poor diversification

The 3 months correlation between Bitcoin and True is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Gold and True USD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on True USD 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 True USD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of True USD has no effect on the direction of Bitcoin Gold i.e., Bitcoin Gold and True USD go up and down completely randomly.

Pair Corralation between Bitcoin Gold and True USD

Assuming the 90 days trading horizon Bitcoin Gold is expected to generate 8.84 times more return on investment than True USD. However, Bitcoin Gold is 8.84 times more volatile than True USD. It trades about 0.13 of its potential returns per unit of risk. True USD is currently generating about 0.09 per unit of risk. If you would invest  2,413  in Bitcoin Gold on January 27, 2024 and sell it today you would earn a total of  813.00  from holding Bitcoin Gold or generate 33.69% return on investment over 90 days.

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

Bitcoin Gold  vs.  True USD

Bitcoin Gold

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin Gold are ranked lower than 8 (%) 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.

True USD

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in True USD are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, True USD is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bitcoin Gold and True USD

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

The idea behind Bitcoin Gold and True USD 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.