Correlation Between WisdomTree Bitcoin and WisdomTree Physical

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

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

Diversification Opportunities for WisdomTree Bitcoin and WisdomTree Physical

0.88

Correlation Coefficient

WisdomTree Bitcoin  WisdomTree Physical

Very poor diversification

The 3 months correlation between WisdomTree and WisdomTree is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Bitcoin and WisdomTree Physical Palladium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Physical and WisdomTree 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 WisdomTree Bitcoin are associated (or correlated) with WisdomTree Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Physical has no effect on the direction of WisdomTree Bitcoin i.e., WisdomTree Bitcoin and WisdomTree Physical go up and down completely randomly.

Pair Corralation between WisdomTree Bitcoin and WisdomTree Physical

Assuming the 90 days trading horizon WisdomTree Bitcoin is expected to generate 1.14 times less return on investment than WisdomTree Physical. But when comparing it to its historical volatility, WisdomTree Bitcoin is 1.31 times less risky than WisdomTree Physical. It trades about 0.12 of its potential returns per unit of risk. WisdomTree Physical Palladium is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  7,821  in WisdomTree Physical Palladium on May 12, 2025 and sell it today you would earn a total of  1,116  from holding WisdomTree Physical Palladium or generate 14.27% return on investment over 90 days.

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

WisdomTree Bitcoin  vs.  WisdomTree Physical Palladium

WisdomTree Bitcoin

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Bitcoin are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, WisdomTree Bitcoin may actually be approaching a critical reversion point that can send shares even higher in September 2025.

WisdomTree Physical

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Physical Palladium are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, WisdomTree Physical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WisdomTree Bitcoin and WisdomTree Physical

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

The idea behind WisdomTree Bitcoin and WisdomTree Physical Palladium 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.