Correlation Between Osprey Bitcoin and Bitwise Funds

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

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

Diversification Opportunities for Osprey Bitcoin and Bitwise Funds

0.98

Correlation Coefficient

Osprey Bitcoin  Bitwise Funds

Almost no diversification

The 3 months correlation between Osprey and Bitwise is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Osprey Bitcoin Trust and Bitwise Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitwise Funds Trust and Osprey 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 Osprey Bitcoin Trust are associated (or correlated) with Bitwise Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitwise Funds Trust has no effect on the direction of Osprey Bitcoin i.e., Osprey Bitcoin and Bitwise Funds go up and down completely randomly.

Pair Corralation between Osprey Bitcoin and Bitwise Funds

Given the investment horizon of 90 days Osprey Bitcoin is expected to generate 1.0 times less return on investment than Bitwise Funds. But when comparing it to its historical volatility, Osprey Bitcoin Trust is 1.07 times less risky than Bitwise Funds. It trades about 0.29 of its potential returns per unit of risk. Bitwise Funds Trust is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  4,281  in Bitwise Funds Trust on September 14, 2024 and sell it today you would earn a total of  3,029  from holding Bitwise Funds Trust or generate 70.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Osprey Bitcoin Trust  vs.  Bitwise Funds Trust

Osprey Bitcoin Trust

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Osprey Bitcoin Trust are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Osprey Bitcoin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bitwise Funds Trust

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bitwise Funds Trust are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Bitwise Funds exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Osprey Bitcoin and Bitwise Funds

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

The idea behind Osprey Bitcoin Trust and Bitwise Funds Trust 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.