Correlation Between Snap and IShares Bitcoin
Can any of the company-specific risk be diversified away by investing in both Snap 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 Snap and IShares Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and iShares Bitcoin Trust, you can compare the effects of market volatilities on Snap 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 Snap with a short position of IShares Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and IShares Bitcoin.
Diversification Opportunities for Snap and IShares Bitcoin
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Snap and IShares is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc 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 Snap 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 Snap Inc 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 Snap i.e., Snap and IShares Bitcoin go up and down completely randomly.
Pair Corralation between Snap and IShares Bitcoin
Given the investment horizon of 90 days Snap is expected to generate 2.03 times less return on investment than IShares Bitcoin. In addition to that, Snap is 1.13 times more volatile than iShares Bitcoin Trust. It trades about 0.03 of its total potential returns per unit of risk. iShares Bitcoin Trust is currently generating about 0.07 per unit of volatility. If you would invest 2,961 in iShares Bitcoin Trust on August 30, 2024 and sell it today you would earn a total of 2,542 from holding iShares Bitcoin Trust or generate 85.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 65.05% |
| Values | Daily Returns |
Snap Inc vs. iShares Bitcoin Trust
Performance |
| Timeline |
| Snap Inc |
| iShares Bitcoin Trust |
Snap and IShares Bitcoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and IShares Bitcoin
The main advantage of trading using opposite Snap and IShares Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap 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.The idea behind Snap Inc and iShares Bitcoin 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.| 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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