Correlation Between Schwab Health and Bitcoin Strategy

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

By analyzing existing cross correlation between Schwab Health Care and Bitcoin Strategy Profund, you can compare the effects of market volatilities on Schwab Health and Bitcoin Strategy 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 Schwab Health with a short position of Bitcoin Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab Health and Bitcoin Strategy.

Diversification Opportunities for Schwab Health and Bitcoin Strategy

-0.74

Correlation Coefficient

Schwab Health  Bitcoin Strategy

Pay attention - limited upside

The 3 months correlation between Schwab and Bitcoin is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Health Care and Bitcoin Strategy Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin Strategy Profund and Schwab Health 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 Schwab Health Care are associated (or correlated) with Bitcoin Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin Strategy Profund has no effect on the direction of Schwab Health i.e., Schwab Health and Bitcoin Strategy go up and down completely randomly.

Pair Corralation between Schwab Health and Bitcoin Strategy

Assuming the 90 days horizon Schwab Health Care is expected to under-perform the Bitcoin Strategy. But the mutual fund apears to be less risky and, when comparing its historical volatility, Schwab Health Care is 2.9 times less risky than Bitcoin Strategy. The mutual fund trades about -0.25 of its potential returns per unit of risk. The Bitcoin Strategy Profund is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,176  in Bitcoin Strategy Profund on September 29, 2024 and sell it today you would earn a total of  973.00  from holding Bitcoin Strategy Profund or generate 44.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Schwab Health Care  vs.  Bitcoin Strategy Profund

Schwab Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schwab Health Care has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Bitcoin Strategy Profund

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin Strategy Profund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Bitcoin Strategy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Schwab Health and Bitcoin Strategy

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

The idea behind Schwab Health Care and Bitcoin Strategy Profund 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.