Correlation Between Grayscale Bitcoin and SPDR Galaxy
Can any of the company-specific risk be diversified away by investing in both Grayscale Bitcoin and SPDR Galaxy 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 SPDR Galaxy 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 SPDR Galaxy Digital, you can compare the effects of market volatilities on Grayscale Bitcoin and SPDR Galaxy 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 SPDR Galaxy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and SPDR Galaxy.
Diversification Opportunities for Grayscale Bitcoin and SPDR Galaxy
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Grayscale and SPDR is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and SPDR Galaxy Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Galaxy Digital 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 SPDR Galaxy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Galaxy Digital has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and SPDR Galaxy go up and down completely randomly.
Pair Corralation between Grayscale Bitcoin and SPDR Galaxy
Given the investment horizon of 90 days Grayscale Bitcoin Trust is expected to generate 0.96 times more return on investment than SPDR Galaxy. However, Grayscale Bitcoin Trust is 1.04 times less risky than SPDR Galaxy. It trades about 0.29 of its potential returns per unit of risk. SPDR Galaxy Digital is currently generating about 0.17 per unit of risk. If you would invest 5,248 in Grayscale Bitcoin Trust on September 13, 2024 and sell it today you would earn a total of 2,693 from holding Grayscale Bitcoin Trust or generate 51.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grayscale Bitcoin Trust vs. SPDR Galaxy Digital
Performance |
| Timeline |
| Grayscale Bitcoin Trust |
| SPDR Galaxy Digital |
Grayscale Bitcoin and SPDR Galaxy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grayscale Bitcoin and SPDR Galaxy
The main advantage of trading using opposite Grayscale Bitcoin and SPDR Galaxy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Bitcoin position performs unexpectedly, SPDR Galaxy 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 SPDR Galaxy will offset losses from the drop in SPDR Galaxy'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 |
| SPDR Galaxy vs. Grayscale Bitcoin Trust | SPDR Galaxy vs. Siren Nasdaq NexGen | SPDR Galaxy vs. Bitwise Crypto Industry | SPDR Galaxy vs. Grayscale Bitcoin Mini |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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