Correlation Between Purpose Bitcoin and Bitcoin ETF
Can any of the company-specific risk be diversified away by investing in both Purpose Bitcoin and Bitcoin ETF 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 Purpose Bitcoin and Bitcoin ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Purpose Bitcoin CAD and Bitcoin ETF CAD, you can compare the effects of market volatilities on Purpose Bitcoin and Bitcoin ETF 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 Purpose Bitcoin with a short position of Bitcoin ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Purpose Bitcoin and Bitcoin ETF.
Diversification Opportunities for Purpose Bitcoin and Bitcoin ETF
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Purpose and Bitcoin is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Purpose Bitcoin CAD and Bitcoin ETF CAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin ETF CAD and Purpose 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 Purpose Bitcoin CAD are associated (or correlated) with Bitcoin ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin ETF CAD has no effect on the direction of Purpose Bitcoin i.e., Purpose Bitcoin and Bitcoin ETF go up and down completely randomly.
Pair Corralation between Purpose Bitcoin and Bitcoin ETF
Assuming the 90 days trading horizon Purpose Bitcoin is expected to generate 1.03 times less return on investment than Bitcoin ETF. But when comparing it to its historical volatility, Purpose Bitcoin CAD is 1.03 times less risky than Bitcoin ETF. It trades about 0.36 of its potential returns per unit of risk. Bitcoin ETF CAD is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 3,457 in Bitcoin ETF CAD on August 28, 2024 and sell it today you would earn a total of 1,289 from holding Bitcoin ETF CAD or generate 37.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Purpose Bitcoin CAD vs. Bitcoin ETF CAD
Performance |
| Timeline |
| Purpose Bitcoin CAD |
| Bitcoin ETF CAD |
Purpose Bitcoin and Bitcoin ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Purpose Bitcoin and Bitcoin ETF
The main advantage of trading using opposite Purpose Bitcoin and Bitcoin ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Purpose Bitcoin position performs unexpectedly, Bitcoin ETF 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 Bitcoin ETF will offset losses from the drop in Bitcoin ETF's long position.The idea behind Purpose Bitcoin CAD and Bitcoin ETF CAD 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.| Bitcoin ETF vs. Bitcoin ETF | Bitcoin ETF vs. NBI High Yield | Bitcoin ETF vs. NBI Unconstrained Fixed | Bitcoin ETF vs. Mackenzie Developed ex North |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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