Correlation Between 3iQ CoinShares and Purpose Bitcoin

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

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

Diversification Opportunities for 3iQ CoinShares and Purpose Bitcoin

0.96

Correlation Coefficient

3iQ CoinShares  Purpose Bitcoin

Almost no diversification

The 3 months correlation between 3iQ and Purpose is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding 3iQ CoinShares Ether and Purpose Bitcoin Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Purpose Bitcoin Yield and 3iQ CoinShares 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 CoinShares Ether are associated (or correlated) with Purpose Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Purpose Bitcoin Yield has no effect on the direction of 3iQ CoinShares i.e., 3iQ CoinShares and Purpose Bitcoin go up and down completely randomly.

Pair Corralation between 3iQ CoinShares and Purpose Bitcoin

Assuming the 90 days trading horizon 3iQ CoinShares is expected to generate 1.06 times less return on investment than Purpose Bitcoin. In addition to that, 3iQ CoinShares is 1.34 times more volatile than Purpose Bitcoin Yield. It trades about 0.17 of its total potential returns per unit of risk. Purpose Bitcoin Yield is currently generating about 0.25 per unit of volatility. If you would invest  554.00  in Purpose Bitcoin Yield on September 2, 2024 and sell it today you would earn a total of  327.00  from holding Purpose Bitcoin Yield or generate 59.03% return on investment over 90 days.

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

3iQ CoinShares Ether  vs.  Purpose Bitcoin Yield

3iQ CoinShares Ether

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 3iQ CoinShares Ether are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, 3iQ CoinShares displayed solid returns over the last few months and may actually be approaching a breakup point.

Purpose Bitcoin Yield

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Purpose Bitcoin Yield are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Purpose Bitcoin displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 3iQ CoinShares and Purpose Bitcoin

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

The idea behind 3iQ CoinShares Ether and Purpose Bitcoin Yield 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.