Correlation Between Simplify Equity and Bitwise Crypto
Can any of the company-specific risk be diversified away by investing in both Simplify Equity and Bitwise Crypto 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 Simplify Equity and Bitwise Crypto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simplify Equity PLUS and Bitwise Crypto Industry, you can compare the effects of market volatilities on Simplify Equity and Bitwise Crypto 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 Simplify Equity with a short position of Bitwise Crypto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Equity and Bitwise Crypto.
Diversification Opportunities for Simplify Equity and Bitwise Crypto
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Simplify and Bitwise is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Equity PLUS and Bitwise Crypto Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitwise Crypto Industry and Simplify Equity 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 Simplify Equity PLUS are associated (or correlated) with Bitwise Crypto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitwise Crypto Industry has no effect on the direction of Simplify Equity i.e., Simplify Equity and Bitwise Crypto go up and down completely randomly.
Pair Corralation between Simplify Equity and Bitwise Crypto
Given the investment horizon of 90 days Simplify Equity is expected to generate 4.1 times less return on investment than Bitwise Crypto. But when comparing it to its historical volatility, Simplify Equity PLUS is 5.28 times less risky than Bitwise Crypto. It trades about 0.24 of its potential returns per unit of risk. Bitwise Crypto Industry is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,580 in Bitwise Crypto Industry on August 23, 2024 and sell it today you would earn a total of 390.00 from holding Bitwise Crypto Industry or generate 24.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simplify Equity PLUS vs. Bitwise Crypto Industry
Performance |
| Timeline |
| Simplify Equity PLUS |
| Bitwise Crypto Industry |
Simplify Equity and Bitwise Crypto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simplify Equity and Bitwise Crypto
The main advantage of trading using opposite Simplify Equity and Bitwise Crypto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simplify Equity position performs unexpectedly, Bitwise Crypto 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 Crypto will offset losses from the drop in Bitwise Crypto's long position.| Simplify Equity vs. First Trust SkyBridge | Simplify Equity vs. VanEck Digital Transformation | Simplify Equity vs. Global X Blockchain | Simplify Equity vs. Bitcoin Strategy Profund |
| Bitwise Crypto vs. ProShares Bitcoin Strategy | Bitwise Crypto vs. Bitwise 10 Crypto | Bitwise Crypto vs. Global X Blockchain |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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