Correlation Between Bitwise Core and Derwent London

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

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

Diversification Opportunities for Bitwise Core and Derwent London

0.83

Correlation Coefficient

Bitwise Core  Derwent London

Very poor diversification

The 3 months correlation between Bitwise and Derwent is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Bitwise Core Bitcoin and Derwent London PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Derwent London PLC and Bitwise Core 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 Core Bitcoin are associated (or correlated) with Derwent London. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Derwent London PLC has no effect on the direction of Bitwise Core i.e., Bitwise Core and Derwent London go up and down completely randomly.

Pair Corralation between Bitwise Core and Derwent London

Assuming the 90 days trading horizon Bitwise Core Bitcoin is expected to generate 1.05 times more return on investment than Derwent London. However, Bitwise Core is 1.05 times more volatile than Derwent London PLC. It trades about 0.2 of its potential returns per unit of risk. Derwent London PLC is currently generating about 0.13 per unit of risk. If you would invest  811.00  in Bitwise Core Bitcoin on April 23, 2025 and sell it today you would earn a total of  199.00  from holding Bitwise Core Bitcoin or generate 24.54% return on investment over 90 days.

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

Bitwise Core Bitcoin  vs.  Derwent London PLC

Bitwise Core Bitcoin

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bitwise Core Bitcoin are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Bitwise Core exhibited solid returns over the last few months and may actually be approaching a breakup point.

Derwent London PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Derwent London PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Derwent London reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bitwise Core and Derwent London

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

The idea behind Bitwise Core Bitcoin and Derwent London PLC 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 Commodity Directory module to find actively traded commodities issued by global exchanges.