Correlation Between Global Gold and Bitcoin Strategy

Can any of the company-specific risk be diversified away by investing in both Global Gold and Bitcoin Strategy 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 Global Gold and Bitcoin Strategy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global Gold Fund and Bitcoin Strategy Profund, you can compare the effects of market volatilities on Global Gold and Bitcoin Strategy 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 Global Gold with a short position of Bitcoin Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Gold and Bitcoin Strategy.

Diversification Opportunities for Global Gold and Bitcoin Strategy

-0.8

Correlation Coefficient

Global Gold  Bitcoin Strategy

Pay attention - limited upside

The 3 months correlation between Global and Bitcoin is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and Bitcoin Strategy Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin Strategy Profund and Global 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 Global Gold Fund are associated (or correlated) with Bitcoin Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin Strategy Profund has no effect on the direction of Global Gold i.e., Global Gold and Bitcoin Strategy go up and down completely randomly.

Pair Corralation between Global Gold and Bitcoin Strategy

Assuming the 90 days horizon Global Gold is expected to generate 1.76 times less return on investment than Bitcoin Strategy. But when comparing it to its historical volatility, Global Gold Fund is 2.04 times less risky than Bitcoin Strategy. It trades about 0.1 of its potential returns per unit of risk. Bitcoin Strategy Profund is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,914  in Bitcoin Strategy Profund on October 22, 2024 and sell it today you would earn a total of  1,488  from holding Bitcoin Strategy Profund or generate 77.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Global Gold Fund  vs.  Bitcoin Strategy Profund

Global Gold Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Gold Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Bitcoin Strategy Profund

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin Strategy Profund are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Bitcoin Strategy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Gold and Bitcoin Strategy

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

The idea behind Global Gold Fund and Bitcoin Strategy Profund 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.