Correlation Between Alphabet and Bitwise Funds
Can any of the company-specific risk be diversified away by investing in both Alphabet and Bitwise Funds 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 Alphabet and Bitwise Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet Inc Class C and Bitwise Funds Trust, you can compare the effects of market volatilities on Alphabet and Bitwise Funds 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 Alphabet with a short position of Bitwise Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Bitwise Funds.
Diversification Opportunities for Alphabet and Bitwise Funds
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alphabet and Bitwise is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Bitwise Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitwise Funds Trust and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with Bitwise Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitwise Funds Trust has no effect on the direction of Alphabet i.e., Alphabet and Bitwise Funds go up and down completely randomly.
Pair Corralation between Alphabet and Bitwise Funds
Given the investment horizon of 90 days Alphabet is expected to generate 13.69 times less return on investment than Bitwise Funds. But when comparing it to its historical volatility, Alphabet Inc Class C is 2.3 times less risky than Bitwise Funds. It trades about 0.04 of its potential returns per unit of risk. Bitwise Funds Trust is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 4,142 in Bitwise Funds Trust on August 26, 2024 and sell it today you would earn a total of 1,684 from holding Bitwise Funds Trust or generate 40.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alphabet Inc Class C vs. Bitwise Funds Trust
Performance |
| Timeline |
| Alphabet Class C |
| Bitwise Funds Trust |
Alphabet and Bitwise Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and Bitwise Funds
The main advantage of trading using opposite Alphabet and Bitwise Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, Bitwise Funds 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 Bitwise Funds will offset losses from the drop in Bitwise Funds' long position.The idea behind Alphabet Inc Class C and Bitwise Funds Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Bitwise Funds vs. ProShares Trust | Bitwise Funds vs. iShares Ethereum Trust | Bitwise Funds vs. ProShares Trust | Bitwise Funds 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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