Correlation Between Tidal Commodities and Bitwise Funds

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

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

Diversification Opportunities for Tidal Commodities and Bitwise Funds

0.34

Correlation Coefficient

Tidal Commodities  Bitwise Funds

Weak diversification

The 3 months correlation between Tidal and Bitwise is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Commodities Trust and Bitwise Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitwise Funds Trust and Tidal Commodities 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 Tidal Commodities Trust are associated (or correlated) with Bitwise Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitwise Funds Trust has no effect on the direction of Tidal Commodities i.e., Tidal Commodities and Bitwise Funds go up and down completely randomly.

Pair Corralation between Tidal Commodities and Bitwise Funds

Given the investment horizon of 90 days Tidal Commodities Trust is expected to under-perform the Bitwise Funds. In addition to that, Tidal Commodities is 2.18 times more volatile than Bitwise Funds Trust. It trades about -0.03 of its total potential returns per unit of risk. Bitwise Funds Trust is currently generating about -0.07 per unit of volatility. If you would invest  4,741  in Bitwise Funds Trust on December 26, 2024 and sell it today you would lose (292.00) from holding Bitwise Funds Trust or give up 6.16% of portfolio value over 90 days.

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

Tidal Commodities Trust  vs.  Bitwise Funds Trust

Tidal Commodities Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tidal Commodities Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Tidal Commodities is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

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. In spite of rather sound basic indicators, Bitwise Funds is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Tidal Commodities and Bitwise Funds

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

The idea behind Tidal Commodities Trust and Bitwise Funds 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.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.