Correlation Between IShares Bitcoin and VanEck China

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

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

Diversification Opportunities for IShares Bitcoin and VanEck China

-0.69

Correlation Coefficient

IShares Bitcoin  VanEck China

Excellent diversification

The 3 months correlation between IShares and VanEck is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding iShares Bitcoin Trust and VanEck China Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck China Bond and IShares 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 iShares Bitcoin Trust are associated (or correlated) with VanEck China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck China Bond has no effect on the direction of IShares Bitcoin i.e., IShares Bitcoin and VanEck China go up and down completely randomly.

Pair Corralation between IShares Bitcoin and VanEck China

Given the investment horizon of 90 days iShares Bitcoin Trust is expected to generate 9.73 times more return on investment than VanEck China. However, IShares Bitcoin is 9.73 times more volatile than VanEck China Bond. It trades about 0.25 of its potential returns per unit of risk. VanEck China Bond is currently generating about -0.06 per unit of risk. If you would invest  3,337  in iShares Bitcoin Trust on August 30, 2024 and sell it today you would earn a total of  2,166  from holding iShares Bitcoin Trust or generate 64.91% return on investment over 90 days.

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

iShares Bitcoin Trust  vs.  VanEck China Bond

iShares Bitcoin Trust

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Bitcoin Trust are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent forward indicators, IShares Bitcoin unveiled solid returns over the last few months and may actually be approaching a breakup point.

VanEck China Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck China Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, VanEck China is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares Bitcoin and VanEck China

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

The idea behind iShares Bitcoin Trust and VanEck China Bond 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.