Correlation Between IShares SP and Ninepoint Bitcoin

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

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

Diversification Opportunities for IShares SP and Ninepoint Bitcoin

0.91

Correlation Coefficient

IShares SP  Ninepoint Bitcoin

Almost no diversification

The 3 months correlation between IShares and Ninepoint is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP Mid Cap and Ninepoint Bitcoin ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ninepoint Bitcoin ETF and IShares SP 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 SP Mid Cap are associated (or correlated) with Ninepoint Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ninepoint Bitcoin ETF has no effect on the direction of IShares SP i.e., IShares SP and Ninepoint Bitcoin go up and down completely randomly.

Pair Corralation between IShares SP and Ninepoint Bitcoin

Assuming the 90 days trading horizon IShares SP is expected to generate 2.52 times less return on investment than Ninepoint Bitcoin. But when comparing it to its historical volatility, iShares SP Mid Cap is 2.97 times less risky than Ninepoint Bitcoin. It trades about 0.26 of its potential returns per unit of risk. Ninepoint Bitcoin ETF is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,723  in Ninepoint Bitcoin ETF on September 3, 2024 and sell it today you would earn a total of  770.00  from holding Ninepoint Bitcoin ETF or generate 44.69% return on investment over 90 days.

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

iShares SP Mid Cap  vs.  Ninepoint Bitcoin ETF

iShares SP Mid

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares SP Mid Cap are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, IShares SP displayed solid returns over the last few months and may actually be approaching a breakup point.

Ninepoint Bitcoin ETF

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ninepoint Bitcoin ETF are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Ninepoint Bitcoin displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares SP and Ninepoint Bitcoin

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

The idea behind iShares SP Mid Cap and Ninepoint Bitcoin ETF 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.