Correlation Between Bitwise Funds and Franklin Bitcoin

Can any of the company-specific risk be diversified away by investing in both Bitwise Funds and Franklin Bitcoin 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 Franklin Bitcoin 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 Franklin Bitcoin ETF, you can compare the effects of market volatilities on Bitwise Funds and Franklin Bitcoin 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 Franklin Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitwise Funds and Franklin Bitcoin.

Diversification Opportunities for Bitwise Funds and Franklin Bitcoin

0.91

Correlation Coefficient

Bitwise Funds  Franklin Bitcoin

Almost no diversification

The 3 months correlation between Bitwise and Franklin is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Bitwise Funds Trust and Franklin Bitcoin ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Bitcoin ETF 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 Franklin Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Bitcoin ETF has no effect on the direction of Bitwise Funds i.e., Bitwise Funds and Franklin Bitcoin go up and down completely randomly.

Pair Corralation between Bitwise Funds and Franklin Bitcoin

Given the investment horizon of 90 days Bitwise Funds is expected to generate 2.27 times less return on investment than Franklin Bitcoin. In addition to that, Bitwise Funds is 1.17 times more volatile than Franklin Bitcoin ETF. It trades about 0.04 of its total potential returns per unit of risk. Franklin Bitcoin ETF is currently generating about 0.1 per unit of volatility. If you would invest  2,705  in Franklin Bitcoin ETF on October 5, 2024 and sell it today you would earn a total of  2,936  from holding Franklin Bitcoin ETF or generate 108.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	92.16%
Values	Daily Returns

Bitwise Funds Trust  vs.  Franklin Bitcoin ETF

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.

Franklin Bitcoin ETF

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Bitcoin ETF are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent fundamental drivers, Franklin Bitcoin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bitwise Funds and Franklin Bitcoin

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

The idea behind Bitwise Funds Trust and Franklin Bitcoin ETF 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.