Correlation Between Grayscale Bitcoin and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both Grayscale Bitcoin and Direxion Daily 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 Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grayscale Bitcoin Mini and Direxion Daily Select, you can compare the effects of market volatilities on Grayscale Bitcoin and Direxion Daily 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 Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and Direxion Daily.
Diversification Opportunities for Grayscale Bitcoin and Direxion Daily
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Grayscale and Direxion is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Mini and Direxion Daily Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily Select 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 Mini are associated (or correlated) with Direxion Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Daily Select has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Direxion Daily go up and down completely randomly.
Pair Corralation between Grayscale Bitcoin and Direxion Daily
Considering the 90-day investment horizon Grayscale Bitcoin is expected to generate 1.18 times less return on investment than Direxion Daily. In addition to that, Grayscale Bitcoin is 1.11 times more volatile than Direxion Daily Select. It trades about 0.07 of its total potential returns per unit of risk. Direxion Daily Select is currently generating about 0.09 per unit of volatility. If you would invest 4,541 in Direxion Daily Select on December 10, 2024 and sell it today you would earn a total of 10,425 from holding Direxion Daily Select or generate 229.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 30.97% |
| Values | Daily Returns |
Grayscale Bitcoin Mini vs. Direxion Daily Select
Performance |
| Timeline |
| Grayscale Bitcoin Mini |
| Direxion Daily Select |
Grayscale Bitcoin and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grayscale Bitcoin and Direxion Daily
The main advantage of trading using opposite Grayscale Bitcoin and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Bitcoin position performs unexpectedly, Direxion Daily 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 Direxion Daily will offset losses from the drop in Direxion Daily's long position.| Grayscale Bitcoin vs. Grayscale Funds Trust | Grayscale Bitcoin vs. ProShares Trust | Grayscale Bitcoin vs. Hashdex Nasdaq Crypto | Grayscale Bitcoin vs. iShares Ethereum Trust |
| Direxion Daily vs. Direxion Daily Cloud | Direxion Daily vs. Direxion Daily Travel | Direxion Daily vs. Direxion Daily Dow | Direxion Daily vs. Direxion Daily Cnsmr |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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