Correlation Between Bitcoin Gold and Stellar

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

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

Diversification Opportunities for Bitcoin Gold and Stellar

0.79

Correlation Coefficient

Bitcoin Gold  Stellar

Poor diversification

The 3 months correlation between Bitcoin and Stellar is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Gold and Stellar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stellar 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 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 Gold i.e., Bitcoin Gold and Stellar go up and down completely randomly.

Pair Corralation between Bitcoin Gold and Stellar

Assuming the 90 days trading horizon Bitcoin Gold is expected to generate 1.27 times more return on investment than Stellar. However, Bitcoin Gold is 1.27 times more volatile than Stellar. It trades about 0.13 of its potential returns per unit of risk. Stellar is currently generating about 0.01 per unit of risk. If you would invest  1,630  in Bitcoin Gold on February 6, 2024 and sell it today you would earn a total of  1,819  from holding Bitcoin Gold or generate 111.6% 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.  Stellar

Bitcoin Gold

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin Gold are ranked lower than 11 (%) 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.

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 June 2024.

Pair Trading with Bitcoin Gold and Stellar

The main advantage of trading using opposite Bitcoin Gold and Stellar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin Gold 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 Gold 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..