Correlation Between Valkyrie Bitcoin and IShares Ethereum

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

By analyzing existing cross correlation between Valkyrie Bitcoin Strategy and iShares Ethereum Trust, you can compare the effects of market volatilities on Valkyrie Bitcoin and IShares Ethereum 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 Valkyrie Bitcoin with a short position of IShares Ethereum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valkyrie Bitcoin and IShares Ethereum.

Diversification Opportunities for Valkyrie Bitcoin and IShares Ethereum

0.99

Correlation Coefficient

Valkyrie Bitcoin  IShares Ethereum

No risk reduction

The 3 months correlation between Valkyrie and IShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Valkyrie Bitcoin Strategy and iShares Ethereum Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Ethereum Trust and Valkyrie 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 Valkyrie Bitcoin Strategy are associated (or correlated) with IShares Ethereum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Ethereum Trust has no effect on the direction of Valkyrie Bitcoin i.e., Valkyrie Bitcoin and IShares Ethereum go up and down completely randomly.

Pair Corralation between Valkyrie Bitcoin and IShares Ethereum

Considering the 90-day investment horizon Valkyrie Bitcoin Strategy is expected to generate 0.76 times more return on investment than IShares Ethereum. However, Valkyrie Bitcoin Strategy is 1.31 times less risky than IShares Ethereum. It trades about -0.15 of its potential returns per unit of risk. iShares Ethereum Trust is currently generating about -0.17 per unit of risk. If you would invest  1,472  in Valkyrie Bitcoin Strategy on December 22, 2024 and sell it today you would lose (431.00) from holding Valkyrie Bitcoin Strategy or give up 29.28% of portfolio value over 90 days.

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

Valkyrie Bitcoin Strategy  vs.  iShares Ethereum Trust

Valkyrie Bitcoin Strategy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Valkyrie Bitcoin Strategy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Etf's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the Exchange Traded Fund stockholders.

iShares Ethereum Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Ethereum Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Etf's technical indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with Valkyrie Bitcoin and IShares Ethereum

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

The idea behind Valkyrie Bitcoin Strategy and iShares Ethereum Trust 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.