Can any of the company-specific risk be diversified away by investing in both Bitcoin SV and Ethereum Name 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 SV and Ethereum Name into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin SV and Ethereum Name Service, you can compare the effects of market volatilities on Bitcoin SV and Ethereum Name 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 SV with a short position of Ethereum Name. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin SV and Ethereum Name.
Diversification Opportunities for Bitcoin SV and Ethereum Name
The 3 months correlation between Bitcoin and Ethereum is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin SV and Ethereum Name Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ethereum Name Service and Bitcoin SV 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 SV are associated (or correlated) with Ethereum Name. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ethereum Name Service has no effect on the direction of Bitcoin SV i.e., Bitcoin SV and Ethereum Name go up and down completely randomly.
Pair Corralation between Bitcoin SV and Ethereum Name
Assuming the 90 days trading horizon Bitcoin SV is expected to under-perform the Ethereum Name. But the crypto coin apears to be less risky and, when comparing its historical volatility, Bitcoin SV is 3.04 times less risky than Ethereum Name. The crypto coin trades about -0.03 of its potential returns per unit of risk. The Ethereum Name Service is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,433 in Ethereum Name Service on March 6, 2024 and sell it today you would earn a total of 1,062 from holding Ethereum Name Service or generate 74.11% return on investment over 90 days.
Over the last 90 days Bitcoin SV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in July 2024. The latest tumult may also be a sign of longer-term up-swing for Bitcoin SV shareholders.
Compared to the overall equity markets, risk-adjusted returns on investments in Ethereum Name Service are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Ethereum Name exhibited solid returns over the last few months and may actually be approaching a breakup point.