Correlation Between Bitcoin and Invesco Russell

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

By analyzing existing cross correlation between Bitcoin and Invesco Russell 1000, you can compare the effects of market volatilities on Bitcoin and Invesco Russell 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 Invesco Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin and Invesco Russell.

Diversification Opportunities for Bitcoin and Invesco Russell

0.3

Correlation Coefficient

Bitcoin  Invesco Russell

Weak diversification

The 3 months correlation between Bitcoin and Invesco is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Invesco Russell 1000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Russell 1000 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 Invesco Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Russell 1000 has no effect on the direction of Bitcoin i.e., Bitcoin and Invesco Russell go up and down completely randomly.

Pair Corralation between Bitcoin and Invesco Russell

Assuming the 90 days trading horizon Bitcoin is expected to generate 9.32 times more return on investment than Invesco Russell. However, Bitcoin is 9.32 times more volatile than Invesco Russell 1000. It trades about 0.09 of its potential returns per unit of risk. Invesco Russell 1000 is currently generating about 0.04 per unit of risk. If you would invest  2,333,210  in Bitcoin on October 25, 2024 and sell it today you would earn a total of  8,080,790  from holding Bitcoin or generate 346.34% return on investment over 90 days.

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

Bitcoin  vs.  Invesco Russell 1000

Bitcoin

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin are ranked lower than 17 (%) 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.

Invesco Russell 1000

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Russell 1000 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Invesco Russell is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Bitcoin and Invesco Russell

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

The idea behind Bitcoin and Invesco Russell 1000 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.