Correlation Between Grayscale Digital and Grayscale Bitcoin
Can any of the company-specific risk be diversified away by investing in both Grayscale Digital and Grayscale 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 Digital and Grayscale Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grayscale Digital Large and Grayscale Bitcoin Cash, you can compare the effects of market volatilities on Grayscale Digital and Grayscale 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 Digital with a short position of Grayscale Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Digital and Grayscale Bitcoin.
Diversification Opportunities for Grayscale Digital and Grayscale Bitcoin
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Grayscale and Grayscale is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Digital Large and Grayscale Bitcoin Cash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Bitcoin Cash and Grayscale Digital 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 Digital Large are associated (or correlated) with Grayscale Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grayscale Bitcoin Cash has no effect on the direction of Grayscale Digital i.e., Grayscale Digital and Grayscale Bitcoin go up and down completely randomly.
Pair Corralation between Grayscale Digital and Grayscale Bitcoin
Given the investment horizon of 90 days Grayscale Digital Large is expected to generate 0.68 times more return on investment than Grayscale Bitcoin. However, Grayscale Digital Large is 1.46 times less risky than Grayscale Bitcoin. It trades about 0.34 of its potential returns per unit of risk. Grayscale Bitcoin Cash is currently generating about -0.16 per unit of risk. If you would invest 2,820 in Grayscale Digital Large on August 28, 2024 and sell it today you would earn a total of 1,245 from holding Grayscale Digital Large or generate 44.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grayscale Digital Large vs. Grayscale Bitcoin Cash
Performance |
| Timeline |
| Grayscale Digital Large |
| Grayscale Bitcoin Cash |
Grayscale Digital and Grayscale Bitcoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grayscale Digital and Grayscale Bitcoin
The main advantage of trading using opposite Grayscale Digital and Grayscale Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Digital position performs unexpectedly, Grayscale 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 Grayscale Bitcoin will offset losses from the drop in Grayscale Bitcoin's long position.| Grayscale Digital vs. Grayscale Litecoin Trust | Grayscale Digital vs. Grayscale Bitcoin Cash | Grayscale Digital vs. Grayscale Ethereum Trust | Grayscale Digital vs. Bitwise 10 Crypto |
| Grayscale Bitcoin vs. Grayscale Litecoin Trust | Grayscale Bitcoin vs. Grayscale Digital Large | Grayscale Bitcoin vs. Bitwise 10 Crypto | Grayscale 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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