Correlation Between Grayscale Bitcoin and Invesco KBW
Can any of the company-specific risk be diversified away by investing in both Grayscale Bitcoin and Invesco KBW 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 Invesco KBW 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 Invesco KBW Bank, you can compare the effects of market volatilities on Grayscale Bitcoin and Invesco KBW 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 Invesco KBW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and Invesco KBW.
Diversification Opportunities for Grayscale Bitcoin and Invesco KBW
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Grayscale and Invesco is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and Invesco KBW Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco KBW Bank 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 Invesco KBW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco KBW Bank has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Invesco KBW go up and down completely randomly.
Pair Corralation between Grayscale Bitcoin and Invesco KBW
Given the investment horizon of 90 days Grayscale Bitcoin Trust is expected to generate 1.81 times more return on investment than Invesco KBW. However, Grayscale Bitcoin is 1.81 times more volatile than Invesco KBW Bank. It trades about 0.23 of its potential returns per unit of risk. Invesco KBW Bank is currently generating about 0.24 per unit of risk. If you would invest 5,231 in Grayscale Bitcoin Trust on August 28, 2024 and sell it today you would earn a total of 1,986 from holding Grayscale Bitcoin Trust or generate 37.97% 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. Invesco KBW Bank
Performance |
| Timeline |
| Grayscale Bitcoin Trust |
| Invesco KBW Bank |
Grayscale Bitcoin and Invesco KBW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grayscale Bitcoin and Invesco KBW
The main advantage of trading using opposite Grayscale Bitcoin and Invesco KBW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Bitcoin position performs unexpectedly, Invesco KBW 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 Invesco KBW will offset losses from the drop in Invesco KBW'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 |
| Invesco KBW vs. UBS AG London | Invesco KBW vs. UBS AG London | Invesco KBW vs. ETRACS Quarterly Pay | Invesco KBW vs. ETRACS 2xMonthly Pay |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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