Correlation Between IShares SP and IShares Bitcoin
Can any of the company-specific risk be diversified away by investing in both IShares SP and IShares 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 IShares SP and IShares Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares SP 100 and iShares Bitcoin Trust, you can compare the effects of market volatilities on IShares SP and IShares 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 IShares SP with a short position of IShares Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and IShares Bitcoin.
Diversification Opportunities for IShares SP and IShares Bitcoin
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and IShares is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 100 and iShares Bitcoin Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Bitcoin Trust and IShares SP 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 iShares SP 100 are associated (or correlated) with IShares Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Bitcoin Trust has no effect on the direction of IShares SP i.e., IShares SP and IShares Bitcoin go up and down completely randomly.
Pair Corralation between IShares SP and IShares Bitcoin
Considering the 90-day investment horizon IShares SP is expected to generate 2.56 times less return on investment than IShares Bitcoin. But when comparing it to its historical volatility, iShares SP 100 is 3.97 times less risky than IShares Bitcoin. It trades about 0.12 of its potential returns per unit of risk. iShares Bitcoin Trust is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,889 in iShares Bitcoin Trust on August 26, 2024 and sell it today you would earn a total of 2,760 from holding iShares Bitcoin Trust or generate 95.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 65.19% |
| Values | Daily Returns |
iShares SP 100 vs. iShares Bitcoin Trust
Performance |
| Timeline |
| iShares SP 100 |
| iShares Bitcoin Trust |
IShares SP and IShares Bitcoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SP and IShares Bitcoin
The main advantage of trading using opposite IShares SP and IShares Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP position performs unexpectedly, IShares 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 IShares Bitcoin will offset losses from the drop in IShares Bitcoin's long position.| IShares SP vs. iShares Russell 1000 | IShares SP vs. iShares SP Mid Cap | IShares SP vs. iShares Russell 3000 | IShares SP vs. iShares SP Mid Cap |
| IShares Bitcoin vs. ProShares Trust | IShares Bitcoin vs. iShares Ethereum Trust | IShares Bitcoin vs. ProShares Trust | IShares 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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