Correlation Between NEO and Bitcoin Gold

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

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

Diversification Opportunities for NEO and Bitcoin Gold

0.79

Correlation Coefficient

NEO  Bitcoin Gold

Poor diversification

The 3 months correlation between NEO and Bitcoin is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding NEO and Bitcoin Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin Gold and NEO 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 NEO are associated (or correlated) with Bitcoin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin Gold has no effect on the direction of NEO i.e., NEO and Bitcoin Gold go up and down completely randomly.

Pair Corralation between NEO and Bitcoin Gold

Assuming the 90 days trading horizon NEO is expected to generate 1.83 times more return on investment than Bitcoin Gold. However, NEO is 1.83 times more volatile than Bitcoin Gold. It trades about 0.15 of its potential returns per unit of risk. Bitcoin Gold is currently generating about -0.17 per unit of risk. If you would invest  1,491  in NEO on January 20, 2024 and sell it today you would earn a total of  373.00  from holding NEO or generate 25.02% return on investment over 90 days.

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

NEO  vs.  Bitcoin Gold

NEO

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NEO are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, NEO exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with NEO and Bitcoin Gold

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

The idea behind NEO and Bitcoin Gold 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.