Correlation Between Dow Jones and 3iQ Bitcoin
Can any of the company-specific risk be diversified away by investing in both Dow Jones and 3iQ Bitcoin 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 Dow Jones and 3iQ Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and 3iQ Bitcoin ETF, you can compare the effects of market volatilities on Dow Jones and 3iQ Bitcoin 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 Dow Jones with a short position of 3iQ Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and 3iQ Bitcoin.
Diversification Opportunities for Dow Jones and 3iQ Bitcoin
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and 3iQ is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and 3iQ Bitcoin ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3iQ Bitcoin ETF and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with 3iQ Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3iQ Bitcoin ETF has no effect on the direction of Dow Jones i.e., Dow Jones and 3iQ Bitcoin go up and down completely randomly.
Pair Corralation between Dow Jones and 3iQ Bitcoin
Assuming the 90 days trading horizon Dow Jones is expected to generate 6.49 times less return on investment than 3iQ Bitcoin. But when comparing it to its historical volatility, Dow Jones Industrial is 4.49 times less risky than 3iQ Bitcoin. It trades about 0.08 of its potential returns per unit of risk. 3iQ Bitcoin ETF is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 386.00 in 3iQ Bitcoin ETF on August 29, 2024 and sell it today you would earn a total of 1,649 from holding 3iQ Bitcoin ETF or generate 427.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Dow Jones Industrial vs. 3iQ Bitcoin ETF
Performance |
| Timeline |
Dow Jones and 3iQ Bitcoin Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
3iQ Bitcoin ETF
Pair trading matchups for 3iQ Bitcoin
Pair Trading with Dow Jones and 3iQ Bitcoin
The main advantage of trading using opposite Dow Jones and 3iQ Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, 3iQ Bitcoin 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 3iQ Bitcoin will offset losses from the drop in 3iQ Bitcoin's long position.| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
| 3iQ Bitcoin vs. 3iQ CoinShares Ether | 3iQ Bitcoin vs. NBI High Yield | 3iQ Bitcoin vs. NBI Unconstrained Fixed | 3iQ Bitcoin 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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