Correlation Between Bitcoin and IShares Core

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

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

Diversification Opportunities for Bitcoin and IShares Core

-0.49

Correlation Coefficient

Bitcoin  IShares Core

Very good diversification

The 3 months correlation between Bitcoin and IShares is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and iShares Core DAX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core DAX 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 IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core DAX has no effect on the direction of Bitcoin i.e., Bitcoin and IShares Core go up and down completely randomly.

Pair Corralation between Bitcoin and IShares Core

Assuming the 90 days trading horizon Bitcoin is expected to under-perform the IShares Core. In addition to that, Bitcoin is 2.39 times more volatile than iShares Core DAX. It trades about -0.09 of its total potential returns per unit of risk. iShares Core DAX is currently generating about 0.24 per unit of volatility. If you would invest  16,542  in iShares Core DAX on December 23, 2024 and sell it today you would earn a total of  2,496  from holding iShares Core DAX or generate 15.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.85%
Values	Daily Returns

Bitcoin  vs.  iShares Core DAX

Bitcoin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitcoin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Bitcoin shareholders.

iShares Core DAX

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core DAX are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, IShares Core reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bitcoin and IShares Core

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

The idea behind Bitcoin and iShares Core DAX 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.