Correlation Between Bitwise Funds and Roundhill Magnificent

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

By analyzing existing cross correlation between Bitwise Funds Trust and Roundhill Magnificent Seven, you can compare the effects of market volatilities on Bitwise Funds and Roundhill Magnificent 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 Bitwise Funds with a short position of Roundhill Magnificent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitwise Funds and Roundhill Magnificent.

Diversification Opportunities for Bitwise Funds and Roundhill Magnificent

0.91

Correlation Coefficient

Bitwise Funds  Roundhill Magnificent

Almost no diversification

The 3 months correlation between Bitwise and Roundhill is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Bitwise Funds Trust and Roundhill Magnificent Seven in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roundhill Magnificent and Bitwise Funds 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 Bitwise Funds Trust are associated (or correlated) with Roundhill Magnificent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roundhill Magnificent has no effect on the direction of Bitwise Funds i.e., Bitwise Funds and Roundhill Magnificent go up and down completely randomly.

Pair Corralation between Bitwise Funds and Roundhill Magnificent

Given the investment horizon of 90 days Bitwise Funds Trust is expected to generate 1.25 times more return on investment than Roundhill Magnificent. However, Bitwise Funds is 1.25 times more volatile than Roundhill Magnificent Seven. It trades about -0.08 of its potential returns per unit of risk. Roundhill Magnificent Seven is currently generating about -0.14 per unit of risk. If you would invest  5,609  in Bitwise Funds Trust on December 30, 2024 and sell it today you would lose (711.00) from holding Bitwise Funds Trust or give up 12.68% of portfolio value over 90 days.

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

Bitwise Funds Trust  vs.  Roundhill Magnificent Seven

Bitwise Funds Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitwise Funds Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Etf's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Roundhill Magnificent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Roundhill Magnificent Seven has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with Bitwise Funds and Roundhill Magnificent

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

The idea behind Bitwise Funds Trust and Roundhill Magnificent Seven 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.