Correlation Between Grayscale Digital and First Trust
Can any of the company-specific risk be diversified away by investing in both Grayscale Digital and First Trust 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 First Trust 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 First Trust SkyBridge, you can compare the effects of market volatilities on Grayscale Digital and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Digital and First Trust.
Diversification Opportunities for Grayscale Digital and First Trust
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Grayscale and First is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Digital Large and First Trust SkyBridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust SkyBridge 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust SkyBridge has no effect on the direction of Grayscale Digital i.e., Grayscale Digital and First Trust go up and down completely randomly.
Pair Corralation between Grayscale Digital and First Trust
Given the investment horizon of 90 days Grayscale Digital Large is expected to generate 0.86 times more return on investment than First Trust. However, Grayscale Digital Large is 1.16 times less risky than First Trust. It trades about 0.12 of its potential returns per unit of risk. First Trust SkyBridge is currently generating about 0.08 per unit of risk. If you would invest 930.00 in Grayscale Digital Large on September 12, 2024 and sell it today you would earn a total of 3,445 from holding Grayscale Digital Large or generate 370.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grayscale Digital Large vs. First Trust SkyBridge
Performance |
| Timeline |
| Grayscale Digital Large |
| First Trust SkyBridge |
Grayscale Digital and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grayscale Digital and First Trust
The main advantage of trading using opposite Grayscale Digital and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Digital position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust'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 |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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