Correlation Between Ultrashort MSCI and Bitcoin SV

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Ultrashort MSCI and Bitcoin SV 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 Ultrashort MSCI and Bitcoin SV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ultrashort MSCI EAFE and Bitcoin SV, you can compare the effects of market volatilities on Ultrashort MSCI and Bitcoin SV 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 Ultrashort MSCI with a short position of Bitcoin SV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultrashort MSCI and Bitcoin SV.

Diversification Opportunities for Ultrashort MSCI and Bitcoin SV

-0.09
  Correlation Coefficient

Good diversification

The 3 months correlation between Ultrashort and Bitcoin is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ultrashort MSCI EAFE and Bitcoin SV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin SV and Ultrashort MSCI 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 Ultrashort MSCI EAFE are associated (or correlated) with Bitcoin SV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin SV has no effect on the direction of Ultrashort MSCI i.e., Ultrashort MSCI and Bitcoin SV go up and down completely randomly.

Pair Corralation between Ultrashort MSCI and Bitcoin SV

Considering the 90-day investment horizon Ultrashort MSCI EAFE is expected to under-perform the Bitcoin SV. But the etf apears to be less risky and, when comparing its historical volatility, Ultrashort MSCI EAFE is 1.41 times less risky than Bitcoin SV. The etf trades about -0.09 of its potential returns per unit of risk. The Bitcoin SV is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  5,673  in Bitcoin SV on May 21, 2022 and sell it today you would earn a total of  362.00  from holding Bitcoin SV or generate 6.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

Ultrashort MSCI EAFE  vs.  Bitcoin SV

 Performance (%) 
       Timeline  
Ultrashort MSCI EAFE 
Ultrashort Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Ultrashort MSCI EAFE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Ultrashort MSCI may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Ultrashort Price Channel

Bitcoin SV 
Bitcoin Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin SV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bitcoin SV sustained solid returns over the last few months and may actually be approaching a breakup point.

Bitcoin Price Channel

Ultrashort MSCI and Bitcoin SV Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ultrashort MSCI and Bitcoin SV

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

Ultrashort MSCI EAFE

Pair trading matchups for Ultrashort MSCI

The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Ultrashort MSCI as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Ultrashort MSCI's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Ultrashort MSCI's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Ultrashort MSCI EAFE.
The idea behind Ultrashort MSCI EAFE and Bitcoin SV 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

Other Complementary Tools

Watchlist Optimization
Optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm
Go
Risk-Return Analysis
View associations between returns expected from investment and the risk you assume
Go
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Go
Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Go
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Go