Correlation Between BTCI and Dow Jones
Can any of the company-specific risk be diversified away by investing in both BTCI 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 BTCI and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BTCI and Dow Jones Industrial, you can compare the effects of market volatilities on BTCI 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 BTCI with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTCI and Dow Jones.
Diversification Opportunities for BTCI and Dow Jones
Significant diversification
The 3 months correlation between BTCI and Dow is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding BTCI 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 BTCI 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 BTCI 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 BTCI i.e., BTCI and Dow Jones go up and down completely randomly.
Pair Corralation between BTCI and Dow Jones
Given the investment horizon of 90 days BTCI is expected to generate 4.08 times more return on investment than Dow Jones. However, BTCI is 4.08 times more volatile than Dow Jones Industrial. It trades about 0.29 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 4,721 in BTCI on September 13, 2024 and sell it today you would earn a total of 1,755 from holding BTCI or generate 37.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 8.08% |
| Values | Daily Returns |
BTCI vs. Dow Jones Industrial
Performance |
| Timeline |
BTCI and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
BTCI
Pair trading matchups for BTCI
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with BTCI and Dow Jones
The main advantage of trading using opposite BTCI and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTCI 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.| BTCI vs. Grayscale Bitcoin Trust | BTCI vs. Siren Nasdaq NexGen | BTCI vs. First Trust Indxx | BTCI vs. Bitwise Crypto Industry |
| Dow Jones vs. ChampionX | Dow Jones vs. Highway Holdings Limited | Dow Jones vs. Westinghouse Air Brake | Dow Jones vs. Cementos Pacasmayo SAA |
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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