Correlation Between Bitcoin and Balanced Fund

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Bitcoin and Balanced Fund 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 Balanced Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin and Balanced Fund Class, you can compare the effects of market volatilities on Bitcoin and Balanced Fund 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 Balanced Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin and Balanced Fund.

Diversification Opportunities for Bitcoin and Balanced Fund

0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Bitcoin and Balanced is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Balanced Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Fund Class 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 Balanced Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Fund Class has no effect on the direction of Bitcoin i.e., Bitcoin and Balanced Fund go up and down completely randomly.

Pair Corralation between Bitcoin and Balanced Fund

Assuming the 90 days trading horizon Bitcoin is expected to generate 5.38 times more return on investment than Balanced Fund. However, Bitcoin is 5.38 times more volatile than Balanced Fund Class. It trades about 0.22 of its potential returns per unit of risk. Balanced Fund Class is currently generating about 0.07 per unit of risk. If you would invest  6,701,472  in Bitcoin on October 25, 2024 and sell it today you would earn a total of  3,658,428  from holding Bitcoin or generate 54.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.24%
ValuesDaily Returns

Bitcoin  vs.  Balanced Fund Class

 Performance 
       Timeline  
Bitcoin 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
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.
Balanced Fund Class 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Balanced Fund Class are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Balanced Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bitcoin and Balanced Fund Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bitcoin and Balanced Fund

The main advantage of trading using opposite Bitcoin and Balanced Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin position performs unexpectedly, Balanced Fund 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 Balanced Fund will offset losses from the drop in Balanced Fund's long position.
The idea behind Bitcoin and Balanced Fund Class 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.
Check out your portfolio center.
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

Other Complementary Tools

ETF Categories
List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments
CEOs Directory
Screen CEOs from public companies around the world
Top Crypto Exchanges
Search and analyze digital assets across top global cryptocurrency exchanges
Risk-Return Analysis
View associations between returns expected from investment and the risk you assume
Watchlist Optimization
Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm