Correlation Between Osprey Bitcoin and Bitwise 10

Can any of the company-specific risk be diversified away by investing in both Osprey Bitcoin and Bitwise 10 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 10 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 10 Crypto, you can compare the effects of market volatilities on Osprey Bitcoin and Bitwise 10 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 10. Check out your portfolio center. Please also check ongoing floating volatility patterns of Osprey Bitcoin and Bitwise 10.

Diversification Opportunities for Osprey Bitcoin and Bitwise 10

0.99

Correlation Coefficient

Osprey Bitcoin  Bitwise 10

No risk reduction

The 3 months correlation between Osprey and Bitwise is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Osprey Bitcoin Trust and Bitwise 10 Crypto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitwise 10 Crypto 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 10. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitwise 10 Crypto has no effect on the direction of Osprey Bitcoin i.e., Osprey Bitcoin and Bitwise 10 go up and down completely randomly.

Pair Corralation between Osprey Bitcoin and Bitwise 10

Given the investment horizon of 90 days Osprey Bitcoin is expected to generate 1.66 times less return on investment than Bitwise 10. But when comparing it to its historical volatility, Osprey Bitcoin Trust is 1.17 times less risky than Bitwise 10. It trades about 0.28 of its potential returns per unit of risk. Bitwise 10 Crypto is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  2,682  in Bitwise 10 Crypto on September 15, 2024 and sell it today you would earn a total of  3,813  from holding Bitwise 10 Crypto or generate 142.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Osprey Bitcoin Trust  vs.  Bitwise 10 Crypto

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 abnormal basic indicators, Osprey Bitcoin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bitwise 10 Crypto

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Bitwise 10 Crypto are ranked lower than 31 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unsteady basic indicators, Bitwise 10 showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Osprey Bitcoin and Bitwise 10

The main advantage of trading using opposite Osprey Bitcoin and Bitwise 10 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Osprey Bitcoin position performs unexpectedly, Bitwise 10 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 10 will offset losses from the drop in Bitwise 10's long position.

The idea behind Osprey Bitcoin Trust and Bitwise 10 Crypto 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.