Correlation Between Bitwise Crypto and Roundhill Bitcoin

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

Diversification Opportunities for Bitwise Crypto and Roundhill Bitcoin

0.8

Correlation Coefficient

Bitwise Crypto  Roundhill Bitcoin

Very poor diversification

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

Pair Corralation between Bitwise Crypto and Roundhill Bitcoin

Given the investment horizon of 90 days Bitwise Crypto Industry is expected to under-perform the Roundhill Bitcoin. In addition to that, Bitwise Crypto is 1.51 times more volatile than Roundhill Bitcoin Covered. It trades about -0.11 of its total potential returns per unit of risk. Roundhill Bitcoin Covered is currently generating about -0.05 per unit of volatility. If you would invest  4,461  in Roundhill Bitcoin Covered on December 30, 2024 and sell it today you would lose (432.00) from holding Roundhill Bitcoin Covered or give up 9.68% of portfolio value over 90 days.

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

Bitwise Crypto Industry  vs.  Roundhill Bitcoin Covered

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.

Roundhill Bitcoin Covered

Risk-Adjusted Performance

Very Weak

Over the last 90 days Roundhill Bitcoin Covered has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Bitwise Crypto and Roundhill Bitcoin

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

The idea behind Bitwise Crypto Industry and Roundhill Bitcoin Covered 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.

Check out your portfolio center.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.