Correlation Between Roundhill Investments and Grayscale Bitcoin
Can any of the company-specific risk be diversified away by investing in both Roundhill Investments and Grayscale Bitcoin 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 Roundhill Investments and Grayscale Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roundhill Investments and Grayscale Bitcoin Trust, you can compare the effects of market volatilities on Roundhill Investments and Grayscale Bitcoin 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 Roundhill Investments with a short position of Grayscale Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roundhill Investments and Grayscale Bitcoin.
Diversification Opportunities for Roundhill Investments and Grayscale Bitcoin
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Roundhill and Grayscale is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Roundhill Investments and Grayscale Bitcoin Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Bitcoin Trust and Roundhill Investments 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 Roundhill Investments are associated (or correlated) with Grayscale Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grayscale Bitcoin Trust has no effect on the direction of Roundhill Investments i.e., Roundhill Investments and Grayscale Bitcoin go up and down completely randomly.
Pair Corralation between Roundhill Investments and Grayscale Bitcoin
Given the investment horizon of 90 days Roundhill Investments is expected to generate 113.04 times less return on investment than Grayscale Bitcoin. But when comparing it to its historical volatility, Roundhill Investments is 2.94 times less risky than Grayscale Bitcoin. It trades about 0.0 of its potential returns per unit of risk. Grayscale Bitcoin Trust is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 803.00 in Grayscale Bitcoin Trust on August 30, 2024 and sell it today you would earn a total of 6,879 from holding Grayscale Bitcoin Trust or generate 856.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 31.31% |
| Values | Daily Returns |
Roundhill Investments vs. Grayscale Bitcoin Trust
Performance |
| Timeline |
| Roundhill Investments |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Grayscale Bitcoin Trust |
Roundhill Investments and Grayscale Bitcoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roundhill Investments and Grayscale Bitcoin
The main advantage of trading using opposite Roundhill Investments and Grayscale Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roundhill Investments position performs unexpectedly, Grayscale Bitcoin 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 Grayscale Bitcoin will offset losses from the drop in Grayscale Bitcoin's long position.The idea behind Roundhill Investments and Grayscale Bitcoin Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Grayscale Bitcoin vs. Grayscale Ethereum Trust | Grayscale Bitcoin vs. Riot Blockchain | Grayscale Bitcoin vs. Marathon Digital Holdings | Grayscale Bitcoin vs. Coinbase Global |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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