Correlation Between Ethereum and Bitcoin Gold

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

Diversification Opportunities for Ethereum and Bitcoin Gold

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Ethereum and Bitcoin is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and Bitcoin Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin Gold and Ethereum 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 Ethereum 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 Ethereum i.e., Ethereum and Bitcoin Gold go up and down completely randomly.

Pair Corralation between Ethereum and Bitcoin Gold

Assuming the 90 days trading horizon Ethereum is expected to generate 2.62 times less return on investment than Bitcoin Gold. But when comparing it to its historical volatility, Ethereum is 2.15 times less risky than Bitcoin Gold. It trades about 0.19 of its potential returns per unit of risk. Bitcoin Gold is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,916  in Bitcoin Gold on May 21, 2022 and sell it today you would earn a total of  954.00  from holding Bitcoin Gold or generate 49.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Ethereum  vs.  Bitcoin Gold

 Performance (%) 
       Timeline  
Ethereum 
Ethereum Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Ethereum are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ethereum may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Ethereum Price Channel

Bitcoin Gold 
Bitcoin Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin Gold are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bitcoin Gold sustained solid returns over the last few months and may actually be approaching a breakup point.

Bitcoin Price Channel

Ethereum and Bitcoin Gold Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ethereum and Bitcoin Gold

The main advantage of trading using opposite Ethereum and Bitcoin Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum 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 Ethereum 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 Analyst Recommendations module to analyst recommendations and target price estimates broken down by several categories.

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