Owning PYPL And SQ Is Like Owning Your Own Bitcoin ETF

And, of course, you've got the inverse and leveraged inverse ETFs that are engineered to go up, sometimes by multiples, if the benchmark they follow goes down. But those are specific products; most of the time, correlated assets don't necessarily have to move in 1:1 or -1:+1 lockstep, but they tend to move together because of market psychology or economic conditions.

A lot of the classic correlations – the ones your grandfather would have used in his investing – are negative. Gold is a pretty good example: As uncertainty goes up, stocks go down, and money rotates out of stocks into the safe haven of gold, driving up the price. When the price of the dollar relative to other currencies goes up, the dollar price of gold goes down.

Bonds are another example, though the inverse correlation hasn't been all that strong since 2008; stocks go down, bonds go up. You can point to oil prices and airline stocks, too; as the price of oil goes up, it eats into airline profits, which eats into their stock prices.

Stocks in the same industries usually correlate positively. If U.S. Steel Corp. (X) has a good quarter, its sector "roommate" Nucor Corp. (NUE) probably did, too. That's one of the reasons why the "Sector Spiders" from SPDR are so popular. Sometimes the correlation isn't so obvious; it wasn't with these "Bitcoin stocks," but it's very real.

The first is PayPal Holdings Inc. (PYPL), which recently started allowing users to use Bitcoin on its platform. You can't trade Bitcoin on PayPal, but you can use it on there, and PayPal will convert Bitcoin into fiat currency for you, too.

PayPal and Bitcoin have both moved up by triple digits since the March lows, in a 1:2 correlation, meaning Bitcoin has been driven up almost twice as much as PayPal has for most of the same reasons. What's more, some analysts think that PayPal's adoption of Bitcoin could add, conservatively, at least another 20% to revenue in 2021.

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