Correlation Between Wrapped Bitcoin and MLN

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

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

Diversification Opportunities for Wrapped Bitcoin and MLN

-0.42

Correlation Coefficient

Wrapped Bitcoin  MLN

Very good diversification

The 3 months correlation between Wrapped and MLN is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Wrapped Bitcoin and MLN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MLN and Wrapped 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 Wrapped Bitcoin are associated (or correlated) with MLN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MLN has no effect on the direction of Wrapped Bitcoin i.e., Wrapped Bitcoin and MLN go up and down completely randomly.

Pair Corralation between Wrapped Bitcoin and MLN

Assuming the 90 days trading horizon Wrapped Bitcoin is expected to generate 0.44 times more return on investment than MLN. However, Wrapped Bitcoin is 2.25 times less risky than MLN. It trades about 0.21 of its potential returns per unit of risk. MLN is currently generating about -0.01 per unit of risk. If you would invest  9,342,721  in Wrapped Bitcoin on April 21, 2025 and sell it today you would earn a total of  2,431,779  from holding Wrapped Bitcoin or generate 26.03% return on investment over 90 days.

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

Wrapped Bitcoin  vs.  MLN

Wrapped Bitcoin

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wrapped Bitcoin are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Wrapped Bitcoin exhibited solid returns over the last few months and may actually be approaching a breakup point.

MLN

Risk-Adjusted Performance

Very Weak

Over the last 90 days MLN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, MLN is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Wrapped Bitcoin and MLN

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

The idea behind Wrapped Bitcoin and MLN 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.