Correlation Between Grayscale Bitcoin and Vanguard ESG
Can any of the company-specific risk be diversified away by investing in both Grayscale Bitcoin and Vanguard ESG 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 Vanguard ESG 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 Vanguard ESG Stock, you can compare the effects of market volatilities on Grayscale Bitcoin and Vanguard ESG 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 Vanguard ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and Vanguard ESG.
Diversification Opportunities for Grayscale Bitcoin and Vanguard ESG
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Grayscale and Vanguard is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and Vanguard ESG Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard ESG Stock 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 Vanguard ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard ESG Stock has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Vanguard ESG go up and down completely randomly.
Pair Corralation between Grayscale Bitcoin and Vanguard ESG
Given the investment horizon of 90 days Grayscale Bitcoin Trust is expected to generate 4.3 times more return on investment than Vanguard ESG. However, Grayscale Bitcoin is 4.3 times more volatile than Vanguard ESG Stock. It trades about 0.37 of its potential returns per unit of risk. Vanguard ESG Stock is currently generating about 0.18 per unit of risk. If you would invest 5,538 in Grayscale Bitcoin Trust on August 27, 2024 and sell it today you would earn a total of 2,004 from holding Grayscale Bitcoin Trust or generate 36.19% 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. Vanguard ESG Stock
Performance |
| Timeline |
| Grayscale Bitcoin Trust |
| Vanguard ESG Stock |
Grayscale Bitcoin and Vanguard ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grayscale Bitcoin and Vanguard ESG
The main advantage of trading using opposite Grayscale Bitcoin and Vanguard ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Bitcoin position performs unexpectedly, Vanguard ESG 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 Vanguard ESG will offset losses from the drop in Vanguard ESG'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 |
| Vanguard ESG vs. Vanguard ESG International | Vanguard ESG vs. iShares ESG Aware | Vanguard ESG vs. iShares MSCI USA | Vanguard ESG vs. iShares ESG Aware |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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