Correlation Between Bitcoin and IShares Global

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

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

Diversification Opportunities for Bitcoin and IShares Global

0.34

Correlation Coefficient

Bitcoin  IShares Global

Weak diversification

The 3 months correlation between Bitcoin and IShares is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and iShares Global Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Clean 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 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Clean has no effect on the direction of Bitcoin i.e., Bitcoin and IShares Global go up and down completely randomly.

Pair Corralation between Bitcoin and IShares Global

Assuming the 90 days trading horizon Bitcoin is expected to under-perform the IShares Global. In addition to that, Bitcoin is 2.33 times more volatile than iShares Global Clean. It trades about -0.09 of its total potential returns per unit of risk. iShares Global Clean is currently generating about -0.05 per unit of volatility. If you would invest  639.00  in iShares Global Clean on December 22, 2024 and sell it today you would lose (22.00) from holding iShares Global Clean or give up 3.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	92.31%
Values	Daily Returns

Bitcoin  vs.  iShares Global Clean

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 Global Clean

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Global Clean has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, IShares Global is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bitcoin and IShares Global

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

The idea behind Bitcoin and iShares Global Clean 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.