Correlation Between Grayscale Bitcoin and Vanguard Consumer
Can any of the company-specific risk be diversified away by investing in both Grayscale Bitcoin and Vanguard Consumer 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 Consumer 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 Consumer Discretionary, you can compare the effects of market volatilities on Grayscale Bitcoin and Vanguard Consumer 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 Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and Vanguard Consumer.
Diversification Opportunities for Grayscale Bitcoin and Vanguard Consumer
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Grayscale and Vanguard is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Mini and Vanguard Consumer Discretionar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Consumer 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 Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Consumer has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Vanguard Consumer go up and down completely randomly.
Pair Corralation between Grayscale Bitcoin and Vanguard Consumer
Considering the 90-day investment horizon Grayscale Bitcoin Mini is expected to generate 3.54 times more return on investment than Vanguard Consumer. However, Grayscale Bitcoin is 3.54 times more volatile than Vanguard Consumer Discretionary. It trades about 0.31 of its potential returns per unit of risk. Vanguard Consumer Discretionary is currently generating about 0.35 per unit of risk. If you would invest 3,220 in Grayscale Bitcoin Mini on August 30, 2024 and sell it today you would earn a total of 1,073 from holding Grayscale Bitcoin Mini or generate 33.32% 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 Consumer Discretionar
Performance |
| Timeline |
| Grayscale Bitcoin Mini |
| Vanguard Consumer |
Grayscale Bitcoin and Vanguard Consumer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grayscale Bitcoin and Vanguard Consumer
The main advantage of trading using opposite Grayscale Bitcoin and Vanguard Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Bitcoin position performs unexpectedly, Vanguard Consumer 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 Consumer will offset losses from the drop in Vanguard Consumer'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 Consumer vs. Vanguard Consumer Staples | Vanguard Consumer vs. Vanguard Industrials Index | Vanguard Consumer vs. Vanguard Communication Services | Vanguard Consumer vs. Vanguard Materials 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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