Correlation Between Vulcan Value and IShares Bitcoin

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

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

Diversification Opportunities for Vulcan Value and IShares Bitcoin

-0.57

Correlation Coefficient

Vulcan Value  IShares Bitcoin

Excellent diversification

The 3 months correlation between Vulcan and IShares is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Value Partners and iShares Bitcoin Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Bitcoin Trust and Vulcan Value 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 Vulcan Value Partners are associated (or correlated) with IShares Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Bitcoin Trust has no effect on the direction of Vulcan Value i.e., Vulcan Value and IShares Bitcoin go up and down completely randomly.

Pair Corralation between Vulcan Value and IShares Bitcoin

Assuming the 90 days horizon Vulcan Value Partners is expected to under-perform the IShares Bitcoin. But the etf apears to be less risky and, when comparing its historical volatility, Vulcan Value Partners is 3.78 times less risky than IShares Bitcoin. The etf trades about -0.07 of its potential returns per unit of risk. The iShares Bitcoin Trust is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  3,298  in iShares Bitcoin Trust on September 16, 2024 and sell it today you would earn a total of  2,493  from holding iShares Bitcoin Trust or generate 75.59% return on investment over 90 days.

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

Vulcan Value Partners  vs.  iShares Bitcoin Trust

Vulcan Value Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vulcan Value Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Vulcan Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

iShares Bitcoin Trust

Risk-Adjusted Performance

22 of 100

Solid

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

Pair Trading with Vulcan Value and IShares Bitcoin

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

The idea behind Vulcan Value Partners and iShares Bitcoin 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.