Correlation Between Fidelity Crypto and IShares Blockchain

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

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

Diversification Opportunities for Fidelity Crypto and IShares Blockchain

0.95

Correlation Coefficient

Fidelity Crypto  IShares Blockchain

Almost no diversification

The 3 months correlation between Fidelity and IShares is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Crypto Industry and iShares Blockchain and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Blockchain and and Fidelity Crypto 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 Fidelity Crypto Industry are associated (or correlated) with IShares Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Blockchain and has no effect on the direction of Fidelity Crypto i.e., Fidelity Crypto and IShares Blockchain go up and down completely randomly.

Pair Corralation between Fidelity Crypto and IShares Blockchain

Given the investment horizon of 90 days Fidelity Crypto is expected to generate 1.08 times less return on investment than IShares Blockchain. But when comparing it to its historical volatility, Fidelity Crypto Industry is 1.01 times less risky than IShares Blockchain. It trades about 0.07 of its potential returns per unit of risk. iShares Blockchain and is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,122  in iShares Blockchain and on September 28, 2024 and sell it today you would earn a total of  2,459  from holding iShares Blockchain and or generate 219.16% return on investment over 90 days.

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

Fidelity Crypto Industry  vs.  iShares Blockchain and

Fidelity Crypto Industry

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Crypto Industry are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, Fidelity Crypto reported solid returns over the last few months and may actually be approaching a breakup point.

iShares Blockchain and

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Blockchain and are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, IShares Blockchain exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Crypto and IShares Blockchain

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

The idea behind Fidelity Crypto Industry and iShares Blockchain and 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.