Correlation Between Grayscale Bitcoin and IShares Morningstar
Can any of the company-specific risk be diversified away by investing in both Grayscale Bitcoin and IShares Morningstar 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 IShares Morningstar 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 iShares Morningstar Small Cap, you can compare the effects of market volatilities on Grayscale Bitcoin and IShares Morningstar 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 IShares Morningstar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and IShares Morningstar.
Diversification Opportunities for Grayscale Bitcoin and IShares Morningstar
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Grayscale and IShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and iShares Morningstar Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Morningstar 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 IShares Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Morningstar has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and IShares Morningstar go up and down completely randomly.
Pair Corralation between Grayscale Bitcoin and IShares Morningstar
Given the investment horizon of 90 days Grayscale Bitcoin Trust is expected to generate 3.36 times more return on investment than IShares Morningstar. However, Grayscale Bitcoin is 3.36 times more volatile than iShares Morningstar Small Cap. It trades about 0.23 of its potential returns per unit of risk. iShares Morningstar Small Cap is currently generating about 0.04 per unit of risk. If you would invest 7,358 in Grayscale Bitcoin Trust on September 20, 2024 and sell it today you would earn a total of 1,113 from holding Grayscale Bitcoin Trust or generate 15.13% 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. iShares Morningstar Small Cap
Performance |
| Timeline |
| Grayscale Bitcoin Trust |
| iShares Morningstar |
Grayscale Bitcoin and IShares Morningstar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grayscale Bitcoin and IShares Morningstar
The main advantage of trading using opposite Grayscale Bitcoin and IShares Morningstar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Bitcoin position performs unexpectedly, IShares Morningstar 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 IShares Morningstar will offset losses from the drop in IShares Morningstar'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 |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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