Correlation Between VanEck Bitcoin and RS Public

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

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

Diversification Opportunities for VanEck Bitcoin and RS Public

-0.68

Correlation Coefficient

VanEck Bitcoin  RS Public

Excellent diversification

The 3 months correlation between VanEck and RS Public is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Bitcoin Trust and RS Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RS Public and VanEck Bitcoin 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 VanEck Bitcoin Trust are associated (or correlated) with RS Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RS Public has no effect on the direction of VanEck Bitcoin i.e., VanEck Bitcoin and RS Public go up and down completely randomly.

Pair Corralation between VanEck Bitcoin and RS Public

Given the investment horizon of 90 days VanEck Bitcoin Trust is expected to generate 3.77 times more return on investment than RS Public. However, VanEck Bitcoin is 3.77 times more volatile than RS Public. It trades about -0.02 of its potential returns per unit of risk. RS Public is currently generating about -0.38 per unit of risk. If you would invest  10,835  in VanEck Bitcoin Trust on October 4, 2024 and sell it today you would lose (264.00) from holding VanEck Bitcoin Trust or give up 2.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	90.48%
Values	Daily Returns

VanEck Bitcoin Trust  vs.  RS Public

VanEck Bitcoin Trust

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Bitcoin Trust are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent fundamental indicators, VanEck Bitcoin disclosed solid returns over the last few months and may actually be approaching a breakup point.

RS Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RS Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, RS Public is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with VanEck Bitcoin and RS Public

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

The idea behind VanEck Bitcoin Trust and RS Public 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.