Correlation Between 3iQ CoinShares and Ninepoint Bitcoin

Can any of the company-specific risk be diversified away by investing in both 3iQ CoinShares and Ninepoint Bitcoin 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 3iQ CoinShares and Ninepoint Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 3iQ CoinShares Ether and Ninepoint Bitcoin ETF, you can compare the effects of market volatilities on 3iQ CoinShares and Ninepoint Bitcoin 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 3iQ CoinShares with a short position of Ninepoint Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3iQ CoinShares and Ninepoint Bitcoin.

Diversification Opportunities for 3iQ CoinShares and Ninepoint Bitcoin

0.82

Correlation Coefficient

3iQ CoinShares  Ninepoint Bitcoin

Very poor diversification

The 3 months correlation between 3iQ and Ninepoint is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding 3iQ CoinShares Ether and Ninepoint Bitcoin ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ninepoint Bitcoin ETF and 3iQ CoinShares 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 3iQ CoinShares Ether are associated (or correlated) with Ninepoint Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ninepoint Bitcoin ETF has no effect on the direction of 3iQ CoinShares i.e., 3iQ CoinShares and Ninepoint Bitcoin go up and down completely randomly.

Pair Corralation between 3iQ CoinShares and Ninepoint Bitcoin

Assuming the 90 days trading horizon 3iQ CoinShares Ether is expected to under-perform the Ninepoint Bitcoin. But the etf apears to be less risky and, when comparing its historical volatility, 3iQ CoinShares Ether is 1.61 times less risky than Ninepoint Bitcoin. The etf trades about -0.18 of its potential returns per unit of risk. The Ninepoint Bitcoin ETF is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,454  in Ninepoint Bitcoin ETF on December 30, 2024 and sell it today you would lose (561.00) from holding Ninepoint Bitcoin ETF or give up 22.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

3iQ CoinShares Ether  vs.  Ninepoint Bitcoin ETF

3iQ CoinShares Ether

Risk-Adjusted Performance

Very Weak

Over the last 90 days 3iQ CoinShares Ether has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Ninepoint Bitcoin ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ninepoint Bitcoin ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with 3iQ CoinShares and Ninepoint Bitcoin

The main advantage of trading using opposite 3iQ CoinShares and Ninepoint Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3iQ CoinShares position performs unexpectedly, Ninepoint Bitcoin 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 Ninepoint Bitcoin will offset losses from the drop in Ninepoint Bitcoin's long position.

The idea behind 3iQ CoinShares Ether and Ninepoint Bitcoin ETF 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..