Correlation Between Grayscale Bitcoin and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Grayscale Bitcoin and Dow Jones 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 Grayscale Bitcoin and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grayscale Bitcoin Cash and Dow Jones Industrial, you can compare the effects of market volatilities on Grayscale Bitcoin and Dow Jones 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 Grayscale Bitcoin with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and Dow Jones.
Diversification Opportunities for Grayscale Bitcoin and Dow Jones
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Grayscale and Dow is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Cash and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Grayscale 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 Grayscale Bitcoin Cash are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Dow Jones go up and down completely randomly.
Pair Corralation between Grayscale Bitcoin and Dow Jones
Given the investment horizon of 90 days Grayscale Bitcoin Cash is expected to generate 11.32 times more return on investment than Dow Jones. However, Grayscale Bitcoin is 11.32 times more volatile than Dow Jones Industrial. It trades about 0.08 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 83.00 in Grayscale Bitcoin Cash on November 8, 2024 and sell it today you would earn a total of 285.00 from holding Grayscale Bitcoin Cash or generate 343.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Grayscale Bitcoin Cash vs. Dow Jones Industrial
Performance |
| Timeline |
Grayscale Bitcoin and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Grayscale Bitcoin Cash
Pair trading matchups for Grayscale Bitcoin
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Grayscale Bitcoin and Dow Jones
The main advantage of trading using opposite Grayscale Bitcoin and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Bitcoin position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Grayscale Bitcoin vs. Grayscale Litecoin Trust | Grayscale Bitcoin vs. Grayscale Digital Large | Grayscale Bitcoin vs. Bitwise 10 Crypto | Grayscale Bitcoin vs. Grayscale Ethereum Trust |
| Dow Jones vs. National Vision Holdings | Dow Jones vs. Grocery Outlet Holding | Dow Jones vs. Asbury Automotive Group | Dow Jones vs. Hanover Foods |
Check out your portfolio center.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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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