Correlation Between Dow Jones and Franklin Bitcoin
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Franklin 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 Franklin 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 Franklin Bitcoin ETF, you can compare the effects of market volatilities on Dow Jones and Franklin 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 Franklin Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Franklin Bitcoin.
Diversification Opportunities for Dow Jones and Franklin Bitcoin
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Franklin is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Franklin Bitcoin ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin 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 Franklin Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Bitcoin ETF has no effect on the direction of Dow Jones i.e., Dow Jones and Franklin Bitcoin go up and down completely randomly.
Pair Corralation between Dow Jones and Franklin Bitcoin
Assuming the 90 days trading horizon Dow Jones is expected to generate 4.75 times less return on investment than Franklin Bitcoin. But when comparing it to its historical volatility, Dow Jones Industrial is 4.55 times less risky than Franklin Bitcoin. It trades about 0.37 of its potential returns per unit of risk. Franklin Bitcoin ETF is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 4,052 in Franklin Bitcoin ETF on September 1, 2024 and sell it today you would earn a total of 1,580 from holding Franklin Bitcoin ETF or generate 38.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Franklin Bitcoin ETF
Performance |
| Timeline |
Dow Jones and Franklin Bitcoin Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Franklin Bitcoin ETF
Pair trading matchups for Franklin Bitcoin
Pair Trading with Dow Jones and Franklin Bitcoin
The main advantage of trading using opposite Dow Jones and Franklin Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Franklin 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 Franklin Bitcoin will offset losses from the drop in Franklin Bitcoin's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Franklin Bitcoin vs. ProShares Trust | Franklin Bitcoin vs. iShares Ethereum Trust | Franklin Bitcoin vs. ProShares Trust | Franklin Bitcoin vs. Grayscale Ethereum Trust |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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