Correlation Between Grayscale Bitcoin and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both Grayscale Bitcoin and ProShares UltraShort 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 ProShares UltraShort 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 ProShares UltraShort MSCI, you can compare the effects of market volatilities on Grayscale Bitcoin and ProShares UltraShort 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 ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and ProShares UltraShort.
Diversification Opportunities for Grayscale Bitcoin and ProShares UltraShort
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Grayscale and ProShares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and ProShares UltraShort MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort MSCI 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 ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort MSCI has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and ProShares UltraShort go up and down completely randomly.
Pair Corralation between Grayscale Bitcoin and ProShares UltraShort
Given the investment horizon of 90 days Grayscale Bitcoin Trust is expected to generate 1.4 times more return on investment than ProShares UltraShort. However, Grayscale Bitcoin is 1.4 times more volatile than ProShares UltraShort MSCI. It trades about 0.11 of its potential returns per unit of risk. ProShares UltraShort MSCI is currently generating about 0.09 per unit of risk. If you would invest 3,493 in Grayscale Bitcoin Trust on September 14, 2024 and sell it today you would earn a total of 4,586 from holding Grayscale Bitcoin Trust or generate 131.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grayscale Bitcoin Trust vs. ProShares UltraShort MSCI
Performance |
| Timeline |
| Grayscale Bitcoin Trust |
| ProShares UltraShort MSCI |
Grayscale Bitcoin and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grayscale Bitcoin and ProShares UltraShort
The main advantage of trading using opposite Grayscale Bitcoin and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Bitcoin position performs unexpectedly, ProShares UltraShort 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 ProShares UltraShort will offset losses from the drop in ProShares UltraShort's long position.| Grayscale Bitcoin vs. Grayscale Ethereum Trust | Grayscale Bitcoin vs. Riot Blockchain | Grayscale Bitcoin vs. Marathon Digital Holdings | Grayscale Bitcoin vs. Coinbase Global |
| ProShares UltraShort vs. ProShares UltraShort FTSE | ProShares UltraShort vs. ProShares UltraShort MSCI | ProShares UltraShort vs. ProShares Ultra MSCI | ProShares UltraShort vs. ProShares UltraShort MSCI |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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