Correlation Between Grayscale Bitcoin and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both Grayscale Bitcoin and Vanguard Total 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 Total 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 Total Stock, you can compare the effects of market volatilities on Grayscale Bitcoin and Vanguard Total 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 Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and Vanguard Total.
Diversification Opportunities for Grayscale Bitcoin and Vanguard Total
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grayscale and Vanguard is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Mini and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock 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 Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Vanguard Total go up and down completely randomly.
Pair Corralation between Grayscale Bitcoin and Vanguard Total
Considering the 90-day investment horizon Grayscale Bitcoin Mini is expected to generate 3.07 times more return on investment than Vanguard Total. However, Grayscale Bitcoin is 3.07 times more volatile than Vanguard Total Stock. It trades about 0.21 of its potential returns per unit of risk. Vanguard Total Stock is currently generating about 0.18 per unit of risk. If you would invest 4,187 in Grayscale Bitcoin Mini on November 1, 2024 and sell it today you would earn a total of 436.00 from holding Grayscale Bitcoin Mini or generate 10.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grayscale Bitcoin Mini vs. Vanguard Total Stock
Performance |
| Timeline |
| Grayscale Bitcoin Mini |
| Vanguard Total Stock |
Grayscale Bitcoin and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grayscale Bitcoin and Vanguard Total
The main advantage of trading using opposite Grayscale Bitcoin and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Bitcoin position performs unexpectedly, Vanguard Total 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 Total will offset losses from the drop in Vanguard Total'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 |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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