Correlation Between Purpose Bitcoin and 3iQ CoinShares

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

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

Diversification Opportunities for Purpose Bitcoin and 3iQ CoinShares

0.94

Correlation Coefficient

Purpose Bitcoin  3iQ CoinShares

Almost no diversification

The 3 months correlation between Purpose and 3iQ is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Purpose Bitcoin Yield and 3iQ CoinShares Ether in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3iQ CoinShares Ether and Purpose 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 Purpose Bitcoin Yield are associated (or correlated) with 3iQ CoinShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3iQ CoinShares Ether has no effect on the direction of Purpose Bitcoin i.e., Purpose Bitcoin and 3iQ CoinShares go up and down completely randomly.

Pair Corralation between Purpose Bitcoin and 3iQ CoinShares

Assuming the 90 days trading horizon Purpose Bitcoin Yield is expected to generate 0.74 times more return on investment than 3iQ CoinShares. However, Purpose Bitcoin Yield is 1.35 times less risky than 3iQ CoinShares. It trades about -0.02 of its potential returns per unit of risk. 3iQ CoinShares Ether is currently generating about -0.04 per unit of risk. If you would invest  861.00  in Purpose Bitcoin Yield on October 3, 2024 and sell it today you would lose (22.00) from holding Purpose Bitcoin Yield or give up 2.56% of portfolio value over 90 days.

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

Purpose Bitcoin Yield  vs.  3iQ CoinShares Ether

Purpose Bitcoin Yield

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Purpose Bitcoin Yield are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Purpose Bitcoin displayed solid returns over the last few months and may actually be approaching a breakup point.

3iQ CoinShares Ether

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 3iQ CoinShares Ether are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, 3iQ CoinShares displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Purpose Bitcoin and 3iQ CoinShares

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

The idea behind Purpose Bitcoin Yield and 3iQ CoinShares Ether 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.