Correlation Between Bitcoin and CDSPI Canadian

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Can any of the company-specific risk be diversified away by investing in both Bitcoin and CDSPI Canadian 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 Bitcoin and CDSPI Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin and CDSPI Canadian Equity, you can compare the effects of market volatilities on Bitcoin and CDSPI Canadian 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 Bitcoin with a short position of CDSPI Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin and CDSPI Canadian.

Diversification Opportunities for Bitcoin and CDSPI Canadian

0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between Bitcoin and CDSPI is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and CDSPI Canadian Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDSPI Canadian Equity and Bitcoin 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 Bitcoin are associated (or correlated) with CDSPI Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDSPI Canadian Equity has no effect on the direction of Bitcoin i.e., Bitcoin and CDSPI Canadian go up and down completely randomly.

Pair Corralation between Bitcoin and CDSPI Canadian

Assuming the 90 days trading horizon Bitcoin is expected to generate 4.09 times more return on investment than CDSPI Canadian. However, Bitcoin is 4.09 times more volatile than CDSPI Canadian Equity. It trades about -0.02 of its potential returns per unit of risk. CDSPI Canadian Equity is currently generating about -0.22 per unit of risk. If you would invest  9,665,788  in Bitcoin on October 10, 2024 and sell it today you would lose (164,794) from holding Bitcoin or give up 1.7% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy90.91%
ValuesDaily Returns

Bitcoin  vs.  CDSPI Canadian Equity

 Performance 
       Timeline  
Bitcoin 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Bitcoin exhibited solid returns over the last few months and may actually be approaching a breakup point.
CDSPI Canadian Equity 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CDSPI Canadian Equity has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, CDSPI Canadian is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bitcoin and CDSPI Canadian Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bitcoin and CDSPI Canadian

The main advantage of trading using opposite Bitcoin and CDSPI Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin position performs unexpectedly, CDSPI Canadian 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 CDSPI Canadian will offset losses from the drop in CDSPI Canadian's long position.
The idea behind Bitcoin and CDSPI Canadian Equity 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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