Correlation Between Grayscale Bitcoin and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both Grayscale Bitcoin and Direxion Daily 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 Direxion Daily 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 Direxion Daily SP, you can compare the effects of market volatilities on Grayscale Bitcoin and Direxion Daily 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 Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and Direxion Daily.
Diversification Opportunities for Grayscale Bitcoin and Direxion Daily
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Grayscale and Direxion is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and Direxion Daily SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily SP 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 Direxion Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Daily SP has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Direxion Daily go up and down completely randomly.
Pair Corralation between Grayscale Bitcoin and Direxion Daily
Given the investment horizon of 90 days Grayscale Bitcoin Trust is expected to generate 4.72 times more return on investment than Direxion Daily. However, Grayscale Bitcoin is 4.72 times more volatile than Direxion Daily SP. It trades about 0.13 of its potential returns per unit of risk. Direxion Daily SP is currently generating about -0.07 per unit of risk. If you would invest 1,959 in Grayscale Bitcoin Trust on September 12, 2024 and sell it today you would earn a total of 5,697 from holding Grayscale Bitcoin Trust or generate 290.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grayscale Bitcoin Trust vs. Direxion Daily SP
Performance |
| Timeline |
| Grayscale Bitcoin Trust |
| Direxion Daily SP |
Grayscale Bitcoin and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grayscale Bitcoin and Direxion Daily
The main advantage of trading using opposite Grayscale Bitcoin and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Bitcoin position performs unexpectedly, Direxion Daily 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 Direxion Daily will offset losses from the drop in Direxion Daily'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 |
| Direxion Daily vs. ProShares UltraShort MSCI | Direxion Daily vs. ProShares UltraShort MSCI | Direxion Daily vs. ProShares UltraShort Euro | Direxion Daily vs. ProShares UltraShort MSCI |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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