Correlation Between IShares Canadian and Bitcoin ETF

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

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

Diversification Opportunities for IShares Canadian and Bitcoin ETF

0.68

Correlation Coefficient

IShares Canadian  Bitcoin ETF

Poor diversification

The 3 months correlation between IShares and Bitcoin is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Bitcoin ETF CAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin ETF CAD and IShares Canadian 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 Canadian HYBrid are associated (or correlated) with Bitcoin ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin ETF CAD has no effect on the direction of IShares Canadian i.e., IShares Canadian and Bitcoin ETF go up and down completely randomly.

Pair Corralation between IShares Canadian and Bitcoin ETF

Assuming the 90 days trading horizon IShares Canadian is expected to generate 17.86 times less return on investment than Bitcoin ETF. But when comparing it to its historical volatility, iShares Canadian HYBrid is 12.31 times less risky than Bitcoin ETF. It trades about 0.19 of its potential returns per unit of risk. Bitcoin ETF CAD is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  2,816  in Bitcoin ETF CAD on September 3, 2024 and sell it today you would earn a total of  2,064  from holding Bitcoin ETF CAD or generate 73.3% return on investment over 90 days.

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

iShares Canadian HYBrid  vs.  Bitcoin ETF CAD

iShares Canadian HYBrid

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Canadian HYBrid are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, IShares Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Bitcoin ETF CAD

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin ETF CAD are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Bitcoin ETF displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Canadian and Bitcoin ETF

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

The idea behind iShares Canadian HYBrid and Bitcoin ETF CAD 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.