Correlation Between Bitwise Crypto and ProShares Bitcoin

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

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

Diversification Opportunities for Bitwise Crypto and ProShares Bitcoin

0.94

Correlation Coefficient

Bitwise Crypto  ProShares Bitcoin

Almost no diversification

The 3 months correlation between Bitwise and ProShares is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Bitwise Crypto Industry and ProShares Bitcoin Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Bitcoin and Bitwise Crypto 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 Crypto Industry are associated (or correlated) with ProShares Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Bitcoin has no effect on the direction of Bitwise Crypto i.e., Bitwise Crypto and ProShares Bitcoin go up and down completely randomly.

Pair Corralation between Bitwise Crypto and ProShares Bitcoin

Given the investment horizon of 90 days Bitwise Crypto Industry is expected to under-perform the ProShares Bitcoin. In addition to that, Bitwise Crypto is 1.33 times more volatile than ProShares Bitcoin Strategy. It trades about -0.11 of its total potential returns per unit of risk. ProShares Bitcoin Strategy is currently generating about -0.06 per unit of volatility. If you would invest  2,130  in ProShares Bitcoin Strategy on December 30, 2024 and sell it today you would lose (264.00) from holding ProShares Bitcoin Strategy or give up 12.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Bitwise Crypto Industry  vs.  ProShares Bitcoin Strategy

Bitwise Crypto Industry

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitwise Crypto Industry has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Etf's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.

ProShares Bitcoin

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Bitcoin Strategy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with Bitwise Crypto and ProShares Bitcoin

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

The idea behind Bitwise Crypto Industry and ProShares Bitcoin Strategy 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.