Correlation Between IShares Core and Purpose Bitcoin

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

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

Diversification Opportunities for IShares Core and Purpose Bitcoin

-0.01

Correlation Coefficient

IShares Core  Purpose Bitcoin

Good diversification

The 3 months correlation between IShares and Purpose is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SPTSX and Purpose Bitcoin Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Purpose Bitcoin Yield 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 SPTSX are associated (or correlated) with Purpose Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Purpose Bitcoin Yield has no effect on the direction of IShares Core i.e., IShares Core and Purpose Bitcoin go up and down completely randomly.

Pair Corralation between IShares Core and Purpose Bitcoin

Assuming the 90 days trading horizon iShares Core SPTSX is expected to generate 0.24 times more return on investment than Purpose Bitcoin. However, iShares Core SPTSX is 4.15 times less risky than Purpose Bitcoin. It trades about 0.0 of its potential returns per unit of risk. Purpose Bitcoin Yield is currently generating about -0.04 per unit of risk. If you would invest  4,065  in iShares Core SPTSX on December 1, 2024 and sell it today you would lose (6.00) from holding iShares Core SPTSX or give up 0.15% of portfolio value over 90 days.

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

iShares Core SPTSX  vs.  Purpose Bitcoin Yield

iShares Core SPTSX

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Core SPTSX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, IShares Core is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Purpose Bitcoin Yield

Risk-Adjusted Performance

Very Weak

Over the last 90 days Purpose Bitcoin Yield has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Etf's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with IShares Core and Purpose Bitcoin

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

The idea behind iShares Core SPTSX and Purpose Bitcoin Yield 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.