Correlation Between Dow Jones and 21Shares Bitwise
Can any of the company-specific risk be diversified away by investing in both Dow Jones and 21Shares Bitwise 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 21Shares Bitwise 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 21Shares Bitwise Select, you can compare the effects of market volatilities on Dow Jones and 21Shares Bitwise 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 21Shares Bitwise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and 21Shares Bitwise.
Diversification Opportunities for Dow Jones and 21Shares Bitwise
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dow and 21Shares is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and 21Shares Bitwise Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 21Shares Bitwise Select 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 21Shares Bitwise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 21Shares Bitwise Select has no effect on the direction of Dow Jones i.e., Dow Jones and 21Shares Bitwise go up and down completely randomly.
Pair Corralation between Dow Jones and 21Shares Bitwise
Assuming the 90 days trading horizon Dow Jones is expected to generate 4.4 times less return on investment than 21Shares Bitwise. But when comparing it to its historical volatility, Dow Jones Industrial is 4.56 times less risky than 21Shares Bitwise. It trades about 0.09 of its potential returns per unit of risk. 21Shares Bitwise Select is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,078 in 21Shares Bitwise Select on November 9, 2024 and sell it today you would earn a total of 2,224 from holding 21Shares Bitwise Select or generate 206.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Dow Jones Industrial vs. 21Shares Bitwise Select
Performance |
| Timeline |
Dow Jones and 21Shares Bitwise Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
21Shares Bitwise Select
Pair trading matchups for 21Shares Bitwise
Pair Trading with Dow Jones and 21Shares Bitwise
The main advantage of trading using opposite Dow Jones and 21Shares Bitwise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, 21Shares Bitwise 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 21Shares Bitwise will offset losses from the drop in 21Shares Bitwise's long position.| Dow Jones vs. Douglas Emmett | Dow Jones vs. Todos Medical | Dow Jones vs. Eastern Co | Dow Jones vs. Merit Medical Systems |
| 21Shares Bitwise vs. 21Shares Polygon ETP | 21Shares Bitwise vs. 21Shares Ethereum Core | 21Shares Bitwise vs. 21Shares Tezos staking | 21Shares Bitwise vs. 21Shares Bitcoin ETP |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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