Correlation Between Bitwise Crypto and Industrial Select
Can any of the company-specific risk be diversified away by investing in both Bitwise Crypto and Industrial Select 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 Crypto and Industrial Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitwise Crypto Industry and Industrial Select Sector, you can compare the effects of market volatilities on Bitwise Crypto and Industrial Select 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 Crypto with a short position of Industrial Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitwise Crypto and Industrial Select.
Diversification Opportunities for Bitwise Crypto and Industrial Select
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bitwise and Industrial is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Bitwise Crypto Industry and Industrial Select Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Select Sector and Bitwise Crypto 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 Crypto Industry are associated (or correlated) with Industrial Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Select Sector has no effect on the direction of Bitwise Crypto i.e., Bitwise Crypto and Industrial Select go up and down completely randomly.
Pair Corralation between Bitwise Crypto and Industrial Select
Given the investment horizon of 90 days Bitwise Crypto Industry is expected to generate 5.62 times more return on investment than Industrial Select. However, Bitwise Crypto is 5.62 times more volatile than Industrial Select Sector. It trades about 0.18 of its potential returns per unit of risk. Industrial Select Sector is currently generating about 0.21 per unit of risk. If you would invest 1,654 in Bitwise Crypto Industry on August 30, 2024 and sell it today you would earn a total of 416.00 from holding Bitwise Crypto Industry or generate 25.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bitwise Crypto Industry vs. Industrial Select Sector
Performance |
| Timeline |
| Bitwise Crypto Industry |
| Industrial Select Sector |
Bitwise Crypto and Industrial Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitwise Crypto and Industrial Select
The main advantage of trading using opposite Bitwise Crypto and Industrial Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitwise Crypto position performs unexpectedly, Industrial Select 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 Industrial Select will offset losses from the drop in Industrial Select's long position.| Bitwise Crypto vs. Bitwise 10 Crypto | Bitwise Crypto vs. VanEck Digital Transformation | Bitwise Crypto vs. Global X Blockchain | Bitwise Crypto vs. First Trust Indxx |
| Industrial Select vs. Materials Select Sector | Industrial Select vs. Consumer Discretionary Select | Industrial Select vs. Consumer Staples Select | Industrial Select vs. Health Care Select |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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