Correlation Between Bitcoin and VIB

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

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

Diversification Opportunities for Bitcoin and VIB

0.79

Correlation Coefficient

Bitcoin  VIB

Poor diversification

The 3 months correlation between Bitcoin and VIB is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and VIB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIB and 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 Bitcoin are associated (or correlated) with VIB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIB has no effect on the direction of Bitcoin i.e., Bitcoin and VIB go up and down completely randomly.

Pair Corralation between Bitcoin and VIB

Assuming the 90 days trading horizon Bitcoin is expected to generate 0.42 times more return on investment than VIB. However, Bitcoin is 2.4 times less risky than VIB. It trades about -0.07 of its potential returns per unit of risk. VIB is currently generating about -0.33 per unit of risk. If you would invest  9,505,106  in Bitcoin on January 7, 2025 and sell it today you would lose (1,154,769) from holding Bitcoin or give up 12.15% of portfolio value over 90 days.

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

Bitcoin  vs.  VIB

Bitcoin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitcoin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Bitcoin shareholders.

VIB

Risk-Adjusted Performance

Very Weak

Over the last 90 days VIB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental drivers remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for VIB shareholders.

Pair Trading with Bitcoin and VIB

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

The idea behind Bitcoin and VIB 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.