Correlation Between First Trust and Grayscale Digital
Can any of the company-specific risk be diversified away by investing in both First Trust and Grayscale Digital 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 First Trust and Grayscale Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust SkyBridge and Grayscale Digital Large, you can compare the effects of market volatilities on First Trust and Grayscale Digital 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 First Trust with a short position of Grayscale Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Grayscale Digital.
Diversification Opportunities for First Trust and Grayscale Digital
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between First and Grayscale is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding First Trust SkyBridge and Grayscale Digital Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Digital Large and First Trust 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 First Trust SkyBridge are associated (or correlated) with Grayscale Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grayscale Digital Large has no effect on the direction of First Trust i.e., First Trust and Grayscale Digital go up and down completely randomly.
Pair Corralation between First Trust and Grayscale Digital
Given the investment horizon of 90 days First Trust is expected to generate 1.33 times less return on investment than Grayscale Digital. In addition to that, First Trust is 1.16 times more volatile than Grayscale Digital Large. It trades about 0.08 of its total potential returns per unit of risk. Grayscale Digital Large is currently generating about 0.12 per unit of volatility. If you would invest 930.00 in Grayscale Digital Large on September 12, 2024 and sell it today you would earn a total of 3,445 from holding Grayscale Digital Large or generate 370.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust SkyBridge vs. Grayscale Digital Large
Performance |
| Timeline |
| First Trust SkyBridge |
| Grayscale Digital Large |
First Trust and Grayscale Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Grayscale Digital
The main advantage of trading using opposite First Trust and Grayscale Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Grayscale Digital 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 Digital will offset losses from the drop in Grayscale Digital's long position.| First Trust vs. Grayscale Bitcoin Trust | First Trust vs. Siren Nasdaq NexGen | First Trust vs. First Trust Indxx | First Trust vs. Bitwise Crypto Industry |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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