Correlation Between First Trust and Bitwise Funds

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

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

Diversification Opportunities for First Trust and Bitwise Funds

-0.08

Correlation Coefficient

First Trust  Bitwise Funds

Good diversification

The 3 months correlation between First and Bitwise is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and Bitwise Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitwise Funds Trust and First Trust 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 First Trust Exchange Traded are associated (or correlated) with Bitwise Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitwise Funds Trust has no effect on the direction of First Trust i.e., First Trust and Bitwise Funds go up and down completely randomly.

Pair Corralation between First Trust and Bitwise Funds

Given the investment horizon of 90 days First Trust is expected to generate 110.05 times less return on investment than Bitwise Funds. But when comparing it to its historical volatility, First Trust Exchange Traded is 222.29 times less risky than Bitwise Funds. It trades about 0.36 of its potential returns per unit of risk. Bitwise Funds Trust is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Bitwise Funds Trust on April 23, 2025 and sell it today you would earn a total of  4,291  from holding Bitwise Funds Trust or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	50.0%
Values	Daily Returns

First Trust Exchange Traded  vs.  Bitwise Funds Trust

First Trust Exchange

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Exchange Traded are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, First Trust exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bitwise Funds Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bitwise Funds Trust are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating primary indicators, Bitwise Funds exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Trust and Bitwise Funds

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

The idea behind First Trust Exchange Traded and Bitwise Funds Trust 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.