Correlation Between Bitwise Bitcoin and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Bitwise Bitcoin and Dow Jones 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 Bitwise Bitcoin and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitwise Bitcoin ETF and Dow Jones Industrial, you can compare the effects of market volatilities on Bitwise Bitcoin and Dow Jones 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 Bitwise Bitcoin with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitwise Bitcoin and Dow Jones.
Diversification Opportunities for Bitwise Bitcoin and Dow Jones
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bitwise and Dow is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Bitwise Bitcoin ETF and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Bitwise Bitcoin 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 Bitwise Bitcoin ETF are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Bitwise Bitcoin i.e., Bitwise Bitcoin and Dow Jones go up and down completely randomly.
Pair Corralation between Bitwise Bitcoin and Dow Jones
Given the investment horizon of 90 days Bitwise Bitcoin ETF is expected to generate 5.23 times more return on investment than Dow Jones. However, Bitwise Bitcoin is 5.23 times more volatile than Dow Jones Industrial. It trades about 0.11 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.1 per unit of risk. If you would invest 2,554 in Bitwise Bitcoin ETF on August 26, 2024 and sell it today you would earn a total of 2,856 from holding Bitwise Bitcoin ETF or generate 111.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 66.37% |
| Values | Daily Returns |
Bitwise Bitcoin ETF vs. Dow Jones Industrial
Performance |
| Timeline |
Bitwise Bitcoin and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Bitwise Bitcoin ETF
Pair trading matchups for Bitwise Bitcoin
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Bitwise Bitcoin and Dow Jones
The main advantage of trading using opposite Bitwise Bitcoin and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitwise Bitcoin position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Bitwise Bitcoin vs. ProShares Trust | Bitwise Bitcoin vs. iShares Ethereum Trust | Bitwise Bitcoin vs. ProShares Trust | Bitwise Bitcoin vs. Grayscale Ethereum Trust |
| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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