Correlation Between Bitcoin ETF and IShares IG

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

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

Diversification Opportunities for Bitcoin ETF and IShares IG

-0.47

Correlation Coefficient

Bitcoin ETF  IShares IG

Very good diversification

The 3 months correlation between Bitcoin and IShares is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin ETF CAD and iShares IG Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares IG Corporate and Bitcoin ETF 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 Bitcoin ETF CAD are associated (or correlated) with IShares IG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares IG Corporate has no effect on the direction of Bitcoin ETF i.e., Bitcoin ETF and IShares IG go up and down completely randomly.

Pair Corralation between Bitcoin ETF and IShares IG

Assuming the 90 days trading horizon Bitcoin ETF CAD is expected to generate 7.75 times more return on investment than IShares IG. However, Bitcoin ETF is 7.75 times more volatile than iShares IG Corporate. It trades about 0.11 of its potential returns per unit of risk. iShares IG Corporate is currently generating about 0.0 per unit of risk. If you would invest  2,249  in Bitcoin ETF CAD on October 7, 2024 and sell it today you would earn a total of  2,821  from holding Bitcoin ETF CAD or generate 125.43% return on investment over 90 days.

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

Bitcoin ETF CAD  vs.  iShares IG Corporate

Bitcoin ETF CAD

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin ETF CAD are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Bitcoin ETF displayed solid returns over the last few months and may actually be approaching a breakup point.

iShares IG Corporate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares IG Corporate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, IShares IG is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Bitcoin ETF and IShares IG

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

The idea behind Bitcoin ETF CAD and iShares IG Corporate 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.