Correlation Between First Trust and Simplify Bitcoin
Can any of the company-specific risk be diversified away by investing in both First Trust and Simplify 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 First Trust and Simplify Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Indxx and Simplify Bitcoin Strategy, you can compare the effects of market volatilities on First Trust and Simplify 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 First Trust with a short position of Simplify Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Simplify Bitcoin.
Diversification Opportunities for First Trust and Simplify Bitcoin
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Simplify is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Indxx and Simplify Bitcoin Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Bitcoin Strategy and First Trust 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 First Trust Indxx are associated (or correlated) with Simplify Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Bitcoin Strategy has no effect on the direction of First Trust i.e., First Trust and Simplify Bitcoin go up and down completely randomly.
Pair Corralation between First Trust and Simplify Bitcoin
Given the investment horizon of 90 days First Trust is expected to generate 4.64 times less return on investment than Simplify Bitcoin. But when comparing it to its historical volatility, First Trust Indxx is 4.43 times less risky than Simplify Bitcoin. It trades about 0.1 of its potential returns per unit of risk. Simplify Bitcoin Strategy is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,473 in Simplify Bitcoin Strategy on September 14, 2024 and sell it today you would earn a total of 1,680 from holding Simplify Bitcoin Strategy or generate 114.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Indxx vs. Simplify Bitcoin Strategy
Performance |
| Timeline |
| First Trust Indxx |
| Simplify Bitcoin Strategy |
First Trust and Simplify Bitcoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Simplify Bitcoin
The main advantage of trading using opposite First Trust and Simplify Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Simplify 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 Simplify Bitcoin will offset losses from the drop in Simplify Bitcoin's long position.| First Trust vs. Siren Nasdaq NexGen | First Trust vs. Amplify Transformational Data | First Trust vs. Global X Blockchain | First Trust vs. VanEck Digital Transformation |
| Simplify Bitcoin vs. Grayscale Bitcoin Trust | Simplify Bitcoin vs. Siren Nasdaq NexGen | Simplify Bitcoin vs. Bitwise Crypto Industry | Simplify Bitcoin vs. Grayscale Bitcoin Mini |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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