Correlation Between STEPN and Bitcoin

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

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

Diversification Opportunities for STEPN and Bitcoin

0.56

Correlation Coefficient

STEPN  Bitcoin

Very weak diversification

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

Pair Corralation between STEPN and Bitcoin

Assuming the 90 days trading horizon STEPN is expected to under-perform the Bitcoin. In addition to that, STEPN is 2.48 times more volatile than Bitcoin. It trades about -0.26 of its total potential returns per unit of risk. Bitcoin is currently generating about -0.07 per unit of volatility. If you would invest  9,339,198  in Bitcoin on December 30, 2024 and sell it today you would lose (1,096,436) from holding Bitcoin or give up 11.74% of portfolio value over 90 days.

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

STEPN  vs.  Bitcoin

STEPN

Risk-Adjusted Performance

Very Weak

Over the last 90 days STEPN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for STEPN shareholders.

Bitcoin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitcoin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Bitcoin shareholders.

Pair Trading with STEPN and Bitcoin

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

The idea behind STEPN and Bitcoin 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.