Correlation Between USCF Sustainable and Bitwise Funds

Can any of the company-specific risk be diversified away by investing in both USCF Sustainable and Bitwise Funds 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 USCF Sustainable and Bitwise Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between USCF Sustainable Battery and Bitwise Funds Trust, you can compare the effects of market volatilities on USCF Sustainable and Bitwise Funds 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 USCF Sustainable with a short position of Bitwise Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of USCF Sustainable and Bitwise Funds.

Diversification Opportunities for USCF Sustainable and Bitwise Funds

-0.26

Correlation Coefficient

USCF Sustainable  Bitwise Funds

Very good diversification

The 3 months correlation between USCF and Bitwise is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding USCF Sustainable Battery and Bitwise Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitwise Funds Trust and USCF Sustainable 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 USCF Sustainable Battery are associated (or correlated) with Bitwise Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitwise Funds Trust has no effect on the direction of USCF Sustainable i.e., USCF Sustainable and Bitwise Funds go up and down completely randomly.

Pair Corralation between USCF Sustainable and Bitwise Funds

Considering the 90-day investment horizon USCF Sustainable Battery is expected to generate 1.01 times more return on investment than Bitwise Funds. However, USCF Sustainable is 1.01 times more volatile than Bitwise Funds Trust. It trades about 0.16 of its potential returns per unit of risk. Bitwise Funds Trust is currently generating about -0.07 per unit of risk. If you would invest  1,296  in USCF Sustainable Battery on December 25, 2024 and sell it today you would earn a total of  172.00  from holding USCF Sustainable Battery or generate 13.27% return on investment over 90 days.

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

USCF Sustainable Battery  vs.  Bitwise Funds Trust

USCF Sustainable Battery

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in USCF Sustainable Battery are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, USCF Sustainable sustained solid returns over the last few months and may actually be approaching a breakup point.

Bitwise Funds Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitwise Funds Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Bitwise Funds is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with USCF Sustainable and Bitwise Funds

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

The idea behind USCF Sustainable Battery and Bitwise Funds 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.