Correlation Between Grayscale Bitcoin and Innovator
Can any of the company-specific risk be diversified away by investing in both Grayscale Bitcoin and Innovator 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 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 20 Year, you can compare the effects of market volatilities on Grayscale Bitcoin and Innovator 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and Innovator.
Diversification Opportunities for Grayscale Bitcoin and Innovator
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Grayscale and Innovator is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and Innovator 20 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator 20 Year 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator 20 Year has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Innovator go up and down completely randomly.
Pair Corralation between Grayscale Bitcoin and Innovator
Given the investment horizon of 90 days Grayscale Bitcoin Trust is expected to generate 4.95 times more return on investment than Innovator. However, Grayscale Bitcoin is 4.95 times more volatile than Innovator 20 Year. It trades about 0.14 of its potential returns per unit of risk. Innovator 20 Year is currently generating about 0.01 per unit of risk. If you would invest 1,916 in Grayscale Bitcoin Trust on August 26, 2024 and sell it today you would earn a total of 5,971 from holding Grayscale Bitcoin Trust or generate 311.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grayscale Bitcoin Trust vs. Innovator 20 Year
Performance |
| Timeline |
| Grayscale Bitcoin Trust |
| Innovator 20 Year |
Grayscale Bitcoin and Innovator Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grayscale Bitcoin and Innovator
The main advantage of trading using opposite Grayscale Bitcoin and Innovator positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Bitcoin position performs unexpectedly, Innovator 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 will offset losses from the drop in Innovator'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 |
| Innovator vs. Innovator Long Term | Innovator vs. Northern Lights | Innovator vs. Innovator Russell 2000 | Innovator vs. TrueShares Structured Outcome |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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