Correlation Between Grayscale Bitcoin and Invesco SP
Can any of the company-specific risk be diversified away by investing in both Grayscale Bitcoin and Invesco 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 Invesco 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 Invesco SP SmallCap, you can compare the effects of market volatilities on Grayscale Bitcoin and Invesco 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 Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and Invesco SP.
Diversification Opportunities for Grayscale Bitcoin and Invesco SP
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Grayscale and Invesco is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Mini and Invesco SP SmallCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP SmallCap 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 Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP SmallCap has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Invesco SP go up and down completely randomly.
Pair Corralation between Grayscale Bitcoin and Invesco SP
Considering the 90-day investment horizon Grayscale Bitcoin Mini is expected to generate 2.97 times more return on investment than Invesco SP. However, Grayscale Bitcoin is 2.97 times more volatile than Invesco SP SmallCap. It trades about 0.23 of its potential returns per unit of risk. Invesco SP SmallCap is currently generating about 0.1 per unit of risk. If you would invest 2,805 in Grayscale Bitcoin Mini on August 25, 2024 and sell it today you would earn a total of 1,600 from holding Grayscale Bitcoin Mini or generate 57.04% 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. Invesco SP SmallCap
Performance |
| Timeline |
| Grayscale Bitcoin Mini |
| Invesco SP SmallCap |
Grayscale Bitcoin and Invesco SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grayscale Bitcoin and Invesco SP
The main advantage of trading using opposite Grayscale Bitcoin and Invesco SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Bitcoin position performs unexpectedly, Invesco 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 Invesco SP will offset losses from the drop in Invesco 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 |
| Invesco SP vs. Invesco SP MidCap | Invesco SP vs. Invesco SP International | Invesco SP vs. SPDR SSGA Small | Invesco SP vs. iShares MSCI EAFE |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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