Correlation Between Grayscale Bitcoin and Simplify Bitcoin
Can any of the company-specific risk be diversified away by investing in both Grayscale Bitcoin and Simplify Bitcoin 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 Simplify Bitcoin 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 Simplify Bitcoin Strategy, you can compare the effects of market volatilities on Grayscale Bitcoin and Simplify Bitcoin 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 Simplify Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and Simplify Bitcoin.
Diversification Opportunities for Grayscale Bitcoin and Simplify Bitcoin
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Grayscale and Simplify is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and Simplify Bitcoin Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Bitcoin Strategy 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 Simplify Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Bitcoin Strategy has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Simplify Bitcoin go up and down completely randomly.
Pair Corralation between Grayscale Bitcoin and Simplify Bitcoin
Given the investment horizon of 90 days Grayscale Bitcoin is expected to generate 1.91 times less return on investment than Simplify Bitcoin. But when comparing it to its historical volatility, Grayscale Bitcoin Trust is 1.47 times less risky than Simplify Bitcoin. It trades about 0.15 of its potential returns per unit of risk. Simplify Bitcoin Strategy is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,694 in Simplify Bitcoin Strategy on October 20, 2024 and sell it today you would earn a total of 463.00 from holding Simplify Bitcoin Strategy or generate 17.19% 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. Simplify Bitcoin Strategy
Performance |
| Timeline |
| Grayscale Bitcoin Trust |
| Simplify Bitcoin Strategy |
Grayscale Bitcoin and Simplify Bitcoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grayscale Bitcoin and Simplify Bitcoin
The main advantage of trading using opposite Grayscale Bitcoin and Simplify Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Bitcoin position performs unexpectedly, Simplify Bitcoin 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 Simplify Bitcoin will offset losses from the drop in Simplify Bitcoin'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 |
| Simplify Bitcoin vs. ProShares Trust | Simplify Bitcoin vs. iShares Ethereum Trust | Simplify Bitcoin vs. ProShares Trust | Simplify Bitcoin vs. Grayscale Ethereum Trust |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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