Correlation Between IShares Ethereum and BTCI

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

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

Diversification Opportunities for IShares Ethereum and BTCI

0.56

Correlation Coefficient

IShares Ethereum  BTCI

Very weak diversification

The 3 months correlation between IShares and BTCI is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding iShares Ethereum Trust and BTCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTCI and IShares Ethereum 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 iShares Ethereum Trust are associated (or correlated) with BTCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTCI has no effect on the direction of IShares Ethereum i.e., IShares Ethereum and BTCI go up and down completely randomly.

Pair Corralation between IShares Ethereum and BTCI

Given the investment horizon of 90 days iShares Ethereum Trust is expected to under-perform the BTCI. In addition to that, IShares Ethereum is 1.37 times more volatile than BTCI. It trades about 0.0 of its total potential returns per unit of risk. BTCI is currently generating about 0.12 per unit of volatility. If you would invest  6,065  in BTCI on October 9, 2024 and sell it today you would earn a total of  362.00  from holding BTCI or generate 5.97% return on investment over 90 days.

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

iShares Ethereum Trust  vs.  BTCI

iShares Ethereum Trust

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Ethereum Trust are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent technical indicators, IShares Ethereum sustained solid returns over the last few months and may actually be approaching a breakup point.

BTCI

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BTCI are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental indicators, BTCI demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Ethereum and BTCI

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

The idea behind iShares Ethereum Trust and BTCI 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.