Correlation Between 3iQ Bitcoin and Fidelity Advantage

Can any of the company-specific risk be diversified away by investing in both 3iQ Bitcoin and Fidelity Advantage 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 3iQ Bitcoin and Fidelity Advantage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 3iQ Bitcoin ETF and Fidelity Advantage Bitcoin, you can compare the effects of market volatilities on 3iQ Bitcoin and Fidelity Advantage 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 3iQ Bitcoin with a short position of Fidelity Advantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3iQ Bitcoin and Fidelity Advantage.

Diversification Opportunities for 3iQ Bitcoin and Fidelity Advantage

1.0

Correlation Coefficient

3iQ Bitcoin  Fidelity Advantage

No risk reduction

The 3 months correlation between 3iQ and Fidelity is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding 3iQ Bitcoin ETF and Fidelity Advantage Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advantage and 3iQ 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 3iQ Bitcoin ETF are associated (or correlated) with Fidelity Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advantage has no effect on the direction of 3iQ Bitcoin i.e., 3iQ Bitcoin and Fidelity Advantage go up and down completely randomly.

Pair Corralation between 3iQ Bitcoin and Fidelity Advantage

Assuming the 90 days trading horizon 3iQ Bitcoin is expected to generate 1.01 times less return on investment than Fidelity Advantage. In addition to that, 3iQ Bitcoin is 1.01 times more volatile than Fidelity Advantage Bitcoin. It trades about 0.1 of its total potential returns per unit of risk. Fidelity Advantage Bitcoin is currently generating about 0.1 per unit of volatility. If you would invest  3,134  in Fidelity Advantage Bitcoin on August 31, 2024 and sell it today you would earn a total of  1,383  from holding Fidelity Advantage Bitcoin or generate 44.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

3iQ Bitcoin ETF  vs.  Fidelity Advantage Bitcoin

3iQ Bitcoin ETF

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in 3iQ Bitcoin ETF are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, 3iQ Bitcoin displayed solid returns over the last few months and may actually be approaching a breakup point.

Fidelity Advantage

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advantage Bitcoin are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Fidelity Advantage displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 3iQ Bitcoin and Fidelity Advantage

The main advantage of trading using opposite 3iQ Bitcoin and Fidelity Advantage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3iQ Bitcoin position performs unexpectedly, Fidelity Advantage 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 Fidelity Advantage will offset losses from the drop in Fidelity Advantage's long position.

The idea behind 3iQ Bitcoin ETF and Fidelity Advantage Bitcoin 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.