Correlation Between Aragon and Bitcoin Diamond

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

Diversification Opportunities for Aragon and Bitcoin Diamond

0.92
  Correlation Coefficient

Almost no diversification

The 1 month correlation between Aragon and Bitcoin is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Aragon and Bitcoin Diamond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin Diamond and Aragon 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 Aragon are associated (or correlated) with Bitcoin Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin Diamond has no effect on the direction of Aragon i.e., Aragon and Bitcoin Diamond go up and down completely randomly.

Pair Corralation between Aragon and Bitcoin Diamond

Assuming the 90 days trading horizon Aragon is expected to generate 1.2 times more return on investment than Bitcoin Diamond. However, Aragon is 1.2 times more volatile than Bitcoin Diamond. It trades about -0.17 of its potential returns per unit of risk. Bitcoin Diamond is currently generating about -0.24 per unit of risk. If you would invest  565.00  in Aragon on February 27, 2022 and sell it today you would lose (405.00)  from holding Aragon or give up 71.68% of portfolio value over 90 days.
Time Period1 Month [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy98.46%
ValuesDaily Returns

Aragon  vs.  Bitcoin Diamond

 Performance (%) 
      Timeline 
Aragon 
Aragon Performance
0 of 100
Over the last 90 days Aragon 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 June 2022. The current disturbance may also be a sign of long term up-swing for Aragon investors.

Aragon Price Channel

Bitcoin Diamond 
Bitcoin Performance
0 of 100
Over the last 90 days Bitcoin Diamond 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 fundamental indicators remain somewhat strong which may send shares a bit higher in June 2022. The current disturbance may also be a sign of long term up-swing for Bitcoin Diamond investors.

Bitcoin Price Channel

Aragon and Bitcoin Diamond Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Aragon and Bitcoin Diamond

The main advantage of trading using opposite Aragon and Bitcoin Diamond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aragon position performs unexpectedly, Bitcoin Diamond 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 Diamond will offset losses from the drop in Bitcoin Diamond's long position.
The idea behind Aragon and Bitcoin Diamond 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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