Correlation Between Bitwise Crypto and Simplify Bitcoin

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

Diversification Opportunities for Bitwise Crypto and Simplify Bitcoin

0.97

Correlation Coefficient

Bitwise Crypto  Simplify Bitcoin

Almost no diversification

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

Pair Corralation between Bitwise Crypto and Simplify Bitcoin

Given the investment horizon of 90 days Bitwise Crypto is expected to generate 1.03 times less return on investment than Simplify Bitcoin. In addition to that, Bitwise Crypto is 1.29 times more volatile than Simplify Bitcoin Strategy. It trades about 0.2 of its total potential returns per unit of risk. Simplify Bitcoin Strategy is currently generating about 0.27 per unit of volatility. If you would invest  1,803  in Simplify Bitcoin Strategy on September 15, 2024 and sell it today you would earn a total of  1,425  from holding Simplify Bitcoin Strategy or generate 79.03% return on investment over 90 days.

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

Bitwise Crypto Industry  vs.  Simplify Bitcoin Strategy

Bitwise Crypto Industry

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bitwise Crypto Industry are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Bitwise Crypto reported solid returns over the last few months and may actually be approaching a breakup point.

Simplify Bitcoin Strategy

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Bitcoin Strategy are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Simplify Bitcoin demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bitwise Crypto and Simplify Bitcoin

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

The idea behind Bitwise Crypto Industry and Simplify 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.