Correlation Between Grayscale Bitcoin and Vanguard Small
Can any of the company-specific risk be diversified away by investing in both Grayscale Bitcoin and Vanguard Small 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 Vanguard Small 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 Vanguard Small Cap Index, you can compare the effects of market volatilities on Grayscale Bitcoin and Vanguard Small 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 Vanguard Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and Vanguard Small.
Diversification Opportunities for Grayscale Bitcoin and Vanguard Small
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Grayscale and Vanguard is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Mini and Vanguard Small Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Small Cap 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 Vanguard Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Small Cap has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Vanguard Small go up and down completely randomly.
Pair Corralation between Grayscale Bitcoin and Vanguard Small
Considering the 90-day investment horizon Grayscale Bitcoin Mini is expected to generate 3.5 times more return on investment than Vanguard Small. However, Grayscale Bitcoin is 3.5 times more volatile than Vanguard Small Cap Index. It trades about 0.27 of its potential returns per unit of risk. Vanguard Small Cap Index is currently generating about 0.21 per unit of risk. If you would invest 2,585 in Grayscale Bitcoin Mini on September 12, 2024 and sell it today you would earn a total of 1,909 from holding Grayscale Bitcoin Mini or generate 73.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grayscale Bitcoin Mini vs. Vanguard Small Cap Index
Performance |
| Timeline |
| Grayscale Bitcoin Mini |
| Vanguard Small Cap |
Grayscale Bitcoin and Vanguard Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grayscale Bitcoin and Vanguard Small
The main advantage of trading using opposite Grayscale Bitcoin and Vanguard Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Bitcoin position performs unexpectedly, Vanguard Small 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 Vanguard Small will offset losses from the drop in Vanguard Small's long position.| Grayscale Bitcoin vs. ProShares Trust | Grayscale Bitcoin vs. iShares Ethereum Trust | Grayscale Bitcoin vs. ProShares Trust | Grayscale Bitcoin vs. Grayscale Ethereum Trust |
| Vanguard Small vs. Vanguard Mid Cap Index | Vanguard Small vs. Vanguard Small Cap Value | Vanguard Small vs. Vanguard FTSE Emerging | Vanguard Small vs. Vanguard Large Cap Index |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |