Correlation Between Sprott Energy and Bitwise Funds
Can any of the company-specific risk be diversified away by investing in both Sprott Energy 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 Sprott Energy and Bitwise Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprott Energy Transition and Bitwise Funds Trust, you can compare the effects of market volatilities on Sprott Energy 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 Sprott Energy with a short position of Bitwise Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Energy and Bitwise Funds.
Diversification Opportunities for Sprott Energy and Bitwise Funds
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sprott and Bitwise is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Energy Transition 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 Sprott Energy 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 Sprott Energy Transition 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 Sprott Energy i.e., Sprott Energy and Bitwise Funds go up and down completely randomly.
Pair Corralation between Sprott Energy and Bitwise Funds
Given the investment horizon of 90 days Sprott Energy is expected to generate 3.1 times less return on investment than Bitwise Funds. But when comparing it to its historical volatility, Sprott Energy Transition is 1.51 times less risky than Bitwise Funds. It trades about 0.12 of its potential returns per unit of risk. Bitwise Funds Trust is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 4,293 in Bitwise Funds Trust on August 31, 2024 and sell it today you would earn a total of 2,804 from holding Bitwise Funds Trust or generate 65.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprott Energy Transition vs. Bitwise Funds Trust
Performance |
| Timeline |
| Sprott Energy Transition |
| Bitwise Funds Trust |
Sprott Energy and Bitwise Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Energy and Bitwise Funds
The main advantage of trading using opposite Sprott Energy and Bitwise Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Energy 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.| Sprott Energy vs. Sprott Lithium Miners | Sprott Energy vs. Sprott Junior Copper | Sprott Energy vs. Sprott Junior Uranium | Sprott Energy vs. Sprott Nickel Miners |
| Bitwise Funds vs. Tidal Commodities Trust | Bitwise Funds vs. Bitwise Crypto Industry | Bitwise Funds vs. USCF Sustainable Battery |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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