Correlation Between ConocoPhillips and Bitcoin

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Can any of the company-specific risk be diversified away by investing in both ConocoPhillips and Bitcoin 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 ConocoPhillips and Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ConocoPhillips and Bitcoin, you can compare the effects of market volatilities on ConocoPhillips and Bitcoin 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 ConocoPhillips with a short position of Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConocoPhillips and Bitcoin.

Diversification Opportunities for ConocoPhillips and Bitcoin

0.56
  Correlation Coefficient

Very weak diversification

The 3 months correlation between ConocoPhillips and Bitcoin is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding ConocoPhillips and Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin and ConocoPhillips 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 ConocoPhillips are associated (or correlated) with Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin has no effect on the direction of ConocoPhillips i.e., ConocoPhillips and Bitcoin go up and down completely randomly.

Pair Corralation between ConocoPhillips and Bitcoin

Considering the 90-day investment horizon ConocoPhillips is expected to generate 1.84 times less return on investment than Bitcoin. But when comparing it to its historical volatility, ConocoPhillips is 1.56 times less risky than Bitcoin. It trades about 0.04 of its potential returns per unit of risk. Bitcoin is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,008,666  in Bitcoin on December 30, 2023 and sell it today you would earn a total of  3,094,346  from holding Bitcoin or generate 77.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy96.3%
ValuesDaily Returns

ConocoPhillips  vs.  Bitcoin

 Performance 
       Timeline  
ConocoPhillips 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ConocoPhillips are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, ConocoPhillips may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Bitcoin 

Risk-Adjusted Performance

19 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Bitcoin exhibited solid returns over the last few months and may actually be approaching a breakup point.

ConocoPhillips and Bitcoin Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ConocoPhillips and Bitcoin

The main advantage of trading using opposite ConocoPhillips and Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConocoPhillips position performs unexpectedly, Bitcoin 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 Bitcoin will offset losses from the drop in Bitcoin's long position.
The idea behind ConocoPhillips and Bitcoin 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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