Correlation Between Bitcoin Gold and Litecoin

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Can any of the company-specific risk be diversified away by investing in both Bitcoin Gold and Litecoin 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 Litecoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin Gold and Litecoin, you can compare the effects of market volatilities on Bitcoin Gold and Litecoin 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 Litecoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin Gold and Litecoin.

Diversification Opportunities for Bitcoin Gold and Litecoin

-0.42
  Correlation Coefficient

Very good diversification

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

Pair Corralation between Bitcoin Gold and Litecoin

Assuming the 90 days trading horizon Bitcoin Gold is expected to under-perform the Litecoin. But the crypto coin apears to be less risky and, when comparing its historical volatility, Bitcoin Gold is 1.33 times less risky than Litecoin. The crypto coin trades about -0.08 of its potential returns per unit of risk. The Litecoin is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  6,188  in Litecoin on September 3, 2022 and sell it today you would earn a total of  1,607  from holding Litecoin or generate 25.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Bitcoin Gold  vs.  Litecoin

 Performance (%) 
       Timeline  
Bitcoin Gold 
Bitcoin Performance
0 of 100
Over the last 90 days Bitcoin Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Crypto's basic indicators remain somewhat strong which may send shares a bit higher in January 2023. The current disturbance may also be a sign of long term up-swing for Bitcoin Gold investors.

Bitcoin Price Channel

Litecoin 
Litecoin Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Litecoin are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Litecoin sustained solid returns over the last few months and may actually be approaching a breakup point.

Litecoin Price Channel

Bitcoin Gold and Litecoin Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bitcoin Gold and Litecoin

The main advantage of trading using opposite Bitcoin Gold and Litecoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin Gold position performs unexpectedly, Litecoin 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 Litecoin will offset losses from the drop in Litecoin's long position.
Bitcoin Gold vs. Bitcoin
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Bitcoin Gold vs. Litecoin
Bitcoin Gold vs. Monero
The idea behind Bitcoin Gold and Litecoin 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.
Litecoin vs. Bitcoin
Litecoin vs. Dogecoin
Litecoin vs. Monero
Litecoin vs. Ethereum Classic
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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