Correlation Between IShares Core and Bitwise Core

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

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

Diversification Opportunities for IShares Core and Bitwise Core

-0.27

Correlation Coefficient

IShares Core  Bitwise Core

Very good diversification

The 3 months correlation between IShares and Bitwise is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and Bitwise Core Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitwise Core Bitcoin and IShares Core 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 Core MSCI are associated (or correlated) with Bitwise Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitwise Core Bitcoin has no effect on the direction of IShares Core i.e., IShares Core and Bitwise Core go up and down completely randomly.

Pair Corralation between IShares Core and Bitwise Core

Assuming the 90 days trading horizon IShares Core is expected to generate 19.17 times less return on investment than Bitwise Core. But when comparing it to its historical volatility, iShares Core MSCI is 3.49 times less risky than Bitwise Core. It trades about 0.04 of its potential returns per unit of risk. Bitwise Core Bitcoin is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  511.00  in Bitwise Core Bitcoin on October 9, 2024 and sell it today you would earn a total of  470.00  from holding Bitwise Core Bitcoin or generate 91.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	20.96%
Values	Daily Returns

iShares Core MSCI  vs.  Bitwise Core Bitcoin

iShares Core MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Core MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, IShares Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Bitwise Core Bitcoin

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bitwise Core Bitcoin are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Bitwise Core exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Core and Bitwise Core

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

The idea behind iShares Core MSCI and Bitwise Core 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.