Correlation Between Bitwise Crypto and Roundhill Investments

Can any of the company-specific risk be diversified away by investing in both Bitwise Crypto and Roundhill Investments 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 Bitwise Crypto and Roundhill Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bitwise Crypto Industry and Roundhill Investments, you can compare the effects of market volatilities on Bitwise Crypto and Roundhill Investments 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 Bitwise Crypto with a short position of Roundhill Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitwise Crypto and Roundhill Investments.

Diversification Opportunities for Bitwise Crypto and Roundhill Investments

0.51

Correlation Coefficient

Bitwise Crypto  Roundhill Investments

Very weak diversification

The 3 months correlation between Bitwise and Roundhill is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Bitwise Crypto Industry and Roundhill Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roundhill Investments and Bitwise Crypto 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 Bitwise Crypto Industry are associated (or correlated) with Roundhill Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roundhill Investments has no effect on the direction of Bitwise Crypto i.e., Bitwise Crypto and Roundhill Investments go up and down completely randomly.

Pair Corralation between Bitwise Crypto and Roundhill Investments

If you would invest  1,210  in Bitwise Crypto Industry on September 16, 2024 and sell it today you would earn a total of  856.00  from holding Bitwise Crypto Industry or generate 70.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.54%
Values	Daily Returns

Bitwise Crypto Industry  vs.  Roundhill Investments

Bitwise Crypto Industry

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bitwise Crypto Industry are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Bitwise Crypto reported solid returns over the last few months and may actually be approaching a breakup point.

Roundhill Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roundhill Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Roundhill Investments is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bitwise Crypto and Roundhill Investments

The main advantage of trading using opposite Bitwise Crypto and Roundhill Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitwise Crypto position performs unexpectedly, Roundhill Investments 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 Roundhill Investments will offset losses from the drop in Roundhill Investments' long position.

The idea behind Bitwise Crypto Industry and Roundhill Investments 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.