Correlation Between 3iQ Bitcoin and Blockchain Technologies

Can any of the company-specific risk be diversified away by investing in both 3iQ Bitcoin and Blockchain Technologies 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 3iQ Bitcoin and Blockchain Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 3iQ Bitcoin ETF and Blockchain Technologies ETF, you can compare the effects of market volatilities on 3iQ Bitcoin and Blockchain Technologies 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 3iQ Bitcoin with a short position of Blockchain Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3iQ Bitcoin and Blockchain Technologies.

Diversification Opportunities for 3iQ Bitcoin and Blockchain Technologies

0.97

Correlation Coefficient

3iQ Bitcoin  Blockchain Technologies

Almost no diversification

The 3 months correlation between 3iQ and Blockchain is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding 3iQ Bitcoin ETF and Blockchain Technologies ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blockchain Technologies and 3iQ Bitcoin 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 3iQ Bitcoin ETF are associated (or correlated) with Blockchain Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blockchain Technologies has no effect on the direction of 3iQ Bitcoin i.e., 3iQ Bitcoin and Blockchain Technologies go up and down completely randomly.

Pair Corralation between 3iQ Bitcoin and Blockchain Technologies

Assuming the 90 days trading horizon 3iQ Bitcoin ETF is expected to generate 1.13 times more return on investment than Blockchain Technologies. However, 3iQ Bitcoin is 1.13 times more volatile than Blockchain Technologies ETF. It trades about 0.27 of its potential returns per unit of risk. Blockchain Technologies ETF is currently generating about 0.21 per unit of risk. If you would invest  1,252  in 3iQ Bitcoin ETF on September 2, 2024 and sell it today you would earn a total of  917.00  from holding 3iQ Bitcoin ETF or generate 73.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

3iQ Bitcoin ETF  vs.  Blockchain Technologies ETF

3iQ Bitcoin ETF

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in 3iQ Bitcoin ETF are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, 3iQ Bitcoin displayed solid returns over the last few months and may actually be approaching a breakup point.

Blockchain Technologies

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blockchain Technologies ETF are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Blockchain Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 3iQ Bitcoin and Blockchain Technologies

The main advantage of trading using opposite 3iQ Bitcoin and Blockchain Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3iQ Bitcoin position performs unexpectedly, Blockchain Technologies 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 Blockchain Technologies will offset losses from the drop in Blockchain Technologies' long position.

The idea behind 3iQ Bitcoin ETF and Blockchain Technologies ETF 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.