Correlation Between Bitwise Crypto and Simplify Equity

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Can any of the company-specific risk be diversified away by investing in both Bitwise Crypto and Simplify Equity 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 Simplify Equity 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 Simplify Equity PLUS, you can compare the effects of market volatilities on Bitwise Crypto and Simplify Equity 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 Simplify Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitwise Crypto and Simplify Equity.

Diversification Opportunities for Bitwise Crypto and Simplify Equity

0.98
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Bitwise and Simplify is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Bitwise Crypto Industry and Simplify Equity PLUS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Equity PLUS 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 Simplify Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Equity PLUS has no effect on the direction of Bitwise Crypto i.e., Bitwise Crypto and Simplify Equity go up and down completely randomly.

Pair Corralation between Bitwise Crypto and Simplify Equity

Given the investment horizon of 90 days Bitwise Crypto Industry is expected to generate 3.28 times more return on investment than Simplify Equity. However, Bitwise Crypto is 3.28 times more volatile than Simplify Equity PLUS. It trades about 0.34 of its potential returns per unit of risk. Simplify Equity PLUS is currently generating about 0.4 per unit of risk. If you would invest  1,193  in Bitwise Crypto Industry on April 21, 2025 and sell it today you would earn a total of  1,006  from holding Bitwise Crypto Industry or generate 84.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Bitwise Crypto Industry  vs.  Simplify Equity PLUS

 Performance 
       Timeline  
Bitwise Crypto Industry 

Risk-Adjusted Performance

Strong

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Bitwise Crypto Industry are ranked lower than 26 (%) 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.
Simplify Equity PLUS 

Risk-Adjusted Performance

Very Strong

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Equity PLUS are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent fundamental drivers, Simplify Equity exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bitwise Crypto and Simplify Equity Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bitwise Crypto and Simplify Equity

The main advantage of trading using opposite Bitwise Crypto and Simplify Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitwise Crypto position performs unexpectedly, Simplify Equity 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 Simplify Equity will offset losses from the drop in Simplify Equity's long position.
The idea behind Bitwise Crypto Industry and Simplify Equity PLUS 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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