Correlation Between Grayscale Bitcoin and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Grayscale Bitcoin and SPDR SP 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 SPDR SP 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 SPDR SP Retail, you can compare the effects of market volatilities on Grayscale Bitcoin and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and SPDR SP.
Diversification Opportunities for Grayscale Bitcoin and SPDR SP
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Grayscale and SPDR is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Mini and SPDR SP Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Retail 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Retail has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and SPDR SP go up and down completely randomly.
Pair Corralation between Grayscale Bitcoin and SPDR SP
Considering the 90-day investment horizon Grayscale Bitcoin Mini is expected to generate 3.34 times more return on investment than SPDR SP. However, Grayscale Bitcoin is 3.34 times more volatile than SPDR SP Retail. It trades about 0.31 of its potential returns per unit of risk. SPDR SP Retail is currently generating about 0.31 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grayscale Bitcoin Mini vs. SPDR SP Retail
Performance |
| Timeline |
| Grayscale Bitcoin Mini |
| SPDR SP Retail |
Grayscale Bitcoin and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grayscale Bitcoin and SPDR SP
The main advantage of trading using opposite Grayscale Bitcoin and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Bitcoin position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP'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 |
| SPDR SP vs. SPDR SP Homebuilders | SPDR SP vs. Consumer Discretionary Select | SPDR SP vs. SPDR SP Metals | SPDR SP vs. Industrial Select Sector |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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