Correlation Between Dow Jones and Bitcoin ETF
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Bitcoin ETF 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 Bitcoin ETF CAD, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Bitcoin ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Bitcoin ETF.
Diversification Opportunities for Dow Jones and Bitcoin ETF
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and Bitcoin is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial 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 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 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 Dow Jones i.e., Dow Jones and Bitcoin ETF go up and down completely randomly.
Pair Corralation between Dow Jones and Bitcoin ETF
Assuming the 90 days trading horizon Dow Jones is expected to generate 8.96 times less return on investment than Bitcoin ETF. But when comparing it to its historical volatility, Dow Jones Industrial is 4.46 times less risky than Bitcoin ETF. It trades about 0.1 of its potential returns per unit of risk. Bitcoin ETF CAD is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 4,742 in Bitcoin ETF CAD on October 23, 2024 and sell it today you would earn a total of 544.00 from holding Bitcoin ETF CAD or generate 11.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Dow Jones Industrial vs. Bitcoin ETF CAD
Performance |
| Timeline |
Dow Jones and Bitcoin ETF Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Bitcoin ETF CAD
Pair trading matchups for Bitcoin ETF
Pair Trading with Dow Jones and Bitcoin ETF
The main advantage of trading using opposite Dow Jones and Bitcoin ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Grupo Televisa SAB | Dow Jones vs. NiSource | Dow Jones vs. Kinetik Holdings | Dow Jones vs. Empresa Distribuidora y |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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