Correlation Between Bitwise Crypto and Invesco Alerian

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

Diversification Opportunities for Bitwise Crypto and Invesco Alerian

0.82

Correlation Coefficient

Bitwise Crypto  Invesco Alerian

Very poor diversification

The 3 months correlation between Bitwise and Invesco is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Bitwise Crypto Industry and Invesco Alerian Galaxy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Alerian Galaxy 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 Invesco Alerian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Alerian Galaxy has no effect on the direction of Bitwise Crypto i.e., Bitwise Crypto and Invesco Alerian go up and down completely randomly.

Pair Corralation between Bitwise Crypto and Invesco Alerian

Given the investment horizon of 90 days Bitwise Crypto Industry is expected to under-perform the Invesco Alerian. In addition to that, Bitwise Crypto is 1.61 times more volatile than Invesco Alerian Galaxy. It trades about -0.11 of its total potential returns per unit of risk. Invesco Alerian Galaxy is currently generating about -0.08 per unit of volatility. If you would invest  2,163  in Invesco Alerian Galaxy on December 29, 2024 and sell it today you would lose (289.00) from holding Invesco Alerian Galaxy or give up 13.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Bitwise Crypto Industry  vs.  Invesco Alerian Galaxy

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.

Invesco Alerian Galaxy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Alerian Galaxy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's forward-looking signals remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with Bitwise Crypto and Invesco Alerian

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

The idea behind Bitwise Crypto Industry and Invesco Alerian Galaxy 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.