Correlation Between IShares Bitcoin and Vanguard
Can any of the company-specific risk be diversified away by investing in both IShares Bitcoin and Vanguard 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 Vanguard 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 Vanguard SP 500, you can compare the effects of market volatilities on IShares Bitcoin and Vanguard 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 Vanguard. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Bitcoin and Vanguard.
Diversification Opportunities for IShares Bitcoin and Vanguard
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IShares and Vanguard is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding iShares Bitcoin Trust and Vanguard SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard SP 500 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 Vanguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard SP 500 has no effect on the direction of IShares Bitcoin i.e., IShares Bitcoin and Vanguard go up and down completely randomly.
Pair Corralation between IShares Bitcoin and Vanguard
Given the investment horizon of 90 days iShares Bitcoin Trust is expected to under-perform the Vanguard. In addition to that, IShares Bitcoin is 2.69 times more volatile than Vanguard SP 500. It trades about -0.29 of its total potential returns per unit of risk. Vanguard SP 500 is currently generating about -0.19 per unit of volatility. If you would invest 54,970 in Vanguard SP 500 on December 5, 2024 and sell it today you would lose (1,925) from holding Vanguard SP 500 or give up 3.5% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
iShares Bitcoin Trust vs. Vanguard SP 500
Performance |
Timeline |
iShares Bitcoin Trust |
Vanguard SP 500 |
IShares Bitcoin and Vanguard Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares Bitcoin and Vanguard
The main advantage of trading using opposite IShares Bitcoin and Vanguard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Bitcoin position performs unexpectedly, Vanguard 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 Vanguard will offset losses from the drop in Vanguard's long position.IShares Bitcoin vs. Grayscale Funds Trust | IShares Bitcoin vs. ProShares Trust | IShares Bitcoin vs. iShares Ethereum Trust | IShares Bitcoin vs. ProShares Trust |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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