Correlation Between Grayscale Bitcoin and Innovator ETFs
Can any of the company-specific risk be diversified away by investing in both Grayscale Bitcoin and Innovator ETFs 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 Innovator ETFs 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 Innovator ETFs Trust, you can compare the effects of market volatilities on Grayscale Bitcoin and Innovator ETFs 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 Innovator ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and Innovator ETFs.
Diversification Opportunities for Grayscale Bitcoin and Innovator ETFs
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Grayscale and Innovator is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and Innovator ETFs Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator ETFs Trust 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 Innovator ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator ETFs Trust has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Innovator ETFs go up and down completely randomly.
Pair Corralation between Grayscale Bitcoin and Innovator ETFs
Given the investment horizon of 90 days Grayscale Bitcoin Trust is expected to generate 81.89 times more return on investment than Innovator ETFs. However, Grayscale Bitcoin is 81.89 times more volatile than Innovator ETFs Trust. It trades about 0.48 of its potential returns per unit of risk. Innovator ETFs Trust is currently generating about 0.38 per unit of risk. If you would invest 5,309 in Grayscale Bitcoin Trust on August 26, 2024 and sell it today you would earn a total of 2,578 from holding Grayscale Bitcoin Trust or generate 48.56% 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. Innovator ETFs Trust
Performance |
| Timeline |
| Grayscale Bitcoin Trust |
| Innovator ETFs Trust |
Grayscale Bitcoin and Innovator ETFs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grayscale Bitcoin and Innovator ETFs
The main advantage of trading using opposite Grayscale Bitcoin and Innovator ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Bitcoin position performs unexpectedly, Innovator ETFs 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 Innovator ETFs will offset losses from the drop in Innovator ETFs' long position.| Grayscale Bitcoin vs. Grayscale Ethereum Trust | Grayscale Bitcoin vs. Riot Blockchain | Grayscale Bitcoin vs. Marathon Digital Holdings | Grayscale Bitcoin vs. Coinbase Global |
| Innovator ETFs vs. First Trust Cboe | Innovator ETFs vs. FT Cboe Vest | Innovator ETFs vs. Innovator SP 500 | Innovator ETFs vs. FT Cboe Vest |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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