Correlation Between Grayscale Bitcoin and ARK 21Shares
Can any of the company-specific risk be diversified away by investing in both Grayscale Bitcoin and ARK 21Shares 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 ARK 21Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grayscale Bitcoin Trust and ARK 21Shares Bitcoin, you can compare the effects of market volatilities on Grayscale Bitcoin and ARK 21Shares 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 ARK 21Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and ARK 21Shares.
Diversification Opportunities for Grayscale Bitcoin and ARK 21Shares
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Grayscale and ARK is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and ARK 21Shares Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARK 21Shares Bitcoin 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 Trust are associated (or correlated) with ARK 21Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARK 21Shares Bitcoin has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and ARK 21Shares go up and down completely randomly.
Pair Corralation between Grayscale Bitcoin and ARK 21Shares
Given the investment horizon of 90 days Grayscale Bitcoin Trust is expected to under-perform the ARK 21Shares. In addition to that, Grayscale Bitcoin Trust is as risky as ARK 21Shares. It trades about -0.17 of its total potential returns per unit of risk. ARK 21Shares Bitcoin is currently generating about -0.16 per unit of volatility. If you would invest 9,559 in ARK 21Shares Bitcoin on December 9, 2024 and sell it today you would lose (870.00) from holding ARK 21Shares Bitcoin or give up 9.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grayscale Bitcoin Trust vs. ARK 21Shares Bitcoin
Performance |
| Timeline |
| Grayscale Bitcoin Trust |
| ARK 21Shares Bitcoin |
Grayscale Bitcoin and ARK 21Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grayscale Bitcoin and ARK 21Shares
The main advantage of trading using opposite Grayscale Bitcoin and ARK 21Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Bitcoin position performs unexpectedly, ARK 21Shares 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 ARK 21Shares will offset losses from the drop in ARK 21Shares' long position.| 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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