Correlation Between Bitcoin and Abrdn ETFs

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

By analyzing existing cross correlation between Bitcoin and abrdn ETFs , you can compare the effects of market volatilities on Bitcoin and Abrdn ETFs 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 Abrdn ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin and Abrdn ETFs.

Diversification Opportunities for Bitcoin and Abrdn ETFs

-0.6

Correlation Coefficient

Bitcoin  Abrdn ETFs

Excellent diversification

The 3 months correlation between Bitcoin and Abrdn is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and abrdn ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on abrdn ETFs 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 Abrdn ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of abrdn ETFs has no effect on the direction of Bitcoin i.e., Bitcoin and Abrdn ETFs go up and down completely randomly.

Pair Corralation between Bitcoin and Abrdn ETFs

Assuming the 90 days trading horizon Bitcoin is expected to generate 7.4 times more return on investment than Abrdn ETFs. However, Bitcoin is 7.4 times more volatile than abrdn ETFs . It trades about 0.09 of its potential returns per unit of risk. abrdn ETFs is currently generating about -0.01 per unit of risk. If you would invest  2,343,721  in Bitcoin on October 24, 2024 and sell it today you would earn a total of  8,016,179  from holding Bitcoin or generate 342.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	60.32%
Values	Daily Returns

Bitcoin  vs.  abrdn ETFs

Bitcoin

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin are ranked lower than 18 (%) 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.

abrdn ETFs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days abrdn ETFs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Abrdn ETFs is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Bitcoin and Abrdn ETFs

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

The idea behind Bitcoin and abrdn ETFs 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.