Correlation Between Bitwise Funds and IShares Ethereum

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

By analyzing existing cross correlation between Bitwise Funds Trust and iShares Ethereum Trust, you can compare the effects of market volatilities on Bitwise Funds and IShares Ethereum 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 Bitwise Funds with a short position of IShares Ethereum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitwise Funds and IShares Ethereum.

Diversification Opportunities for Bitwise Funds and IShares Ethereum

0.97

Correlation Coefficient

Bitwise Funds  IShares Ethereum

Almost no diversification

The 3 months correlation between Bitwise and IShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Bitwise Funds Trust and iShares Ethereum Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Ethereum Trust and Bitwise Funds 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 Bitwise Funds Trust are associated (or correlated) with IShares Ethereum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Ethereum Trust has no effect on the direction of Bitwise Funds i.e., Bitwise Funds and IShares Ethereum go up and down completely randomly.

Pair Corralation between Bitwise Funds and IShares Ethereum

Given the investment horizon of 90 days Bitwise Funds Trust is expected to generate 0.92 times more return on investment than IShares Ethereum. However, Bitwise Funds Trust is 1.08 times less risky than IShares Ethereum. It trades about 0.04 of its potential returns per unit of risk. iShares Ethereum Trust is currently generating about 0.02 per unit of risk. If you would invest  3,062  in Bitwise Funds Trust on October 5, 2024 and sell it today you would earn a total of  644.00  from holding Bitwise Funds Trust or generate 21.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	42.91%
Values	Daily Returns

Bitwise Funds Trust  vs.  iShares Ethereum Trust

Bitwise Funds Trust

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bitwise Funds Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Bitwise Funds demonstrated solid returns over the last few months and may actually be approaching a breakup point.

iShares Ethereum Trust

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Ethereum Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile technical indicators, IShares Ethereum sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bitwise Funds and IShares Ethereum

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

The idea behind Bitwise Funds Trust and iShares Ethereum Trust 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 the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.