Correlation Between Alphabet and Osprey Bitcoin
Can any of the company-specific risk be diversified away by investing in both Alphabet and Osprey 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 Alphabet and Osprey Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet Inc Class A and Osprey Bitcoin Trust, you can compare the effects of market volatilities on Alphabet and Osprey 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 Alphabet with a short position of Osprey Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Osprey Bitcoin.
Diversification Opportunities for Alphabet and Osprey Bitcoin
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alphabet and Osprey is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class A and Osprey Bitcoin Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Osprey Bitcoin Trust and Alphabet 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 Alphabet Inc Class A are associated (or correlated) with Osprey Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Osprey Bitcoin Trust has no effect on the direction of Alphabet i.e., Alphabet and Osprey Bitcoin go up and down completely randomly.
Pair Corralation between Alphabet and Osprey Bitcoin
Assuming the 90 days horizon Alphabet is expected to generate 6.57 times less return on investment than Osprey Bitcoin. But when comparing it to its historical volatility, Alphabet Inc Class A is 2.09 times less risky than Osprey Bitcoin. It trades about 0.08 of its potential returns per unit of risk. Osprey Bitcoin Trust is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,849 in Osprey Bitcoin Trust on September 2, 2024 and sell it today you would earn a total of 1,171 from holding Osprey Bitcoin Trust or generate 63.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alphabet Inc Class A vs. Osprey Bitcoin Trust
Performance |
| Timeline |
| Alphabet Class A |
| Osprey Bitcoin Trust |
Alphabet and Osprey Bitcoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and Osprey Bitcoin
The main advantage of trading using opposite Alphabet and Osprey Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, Osprey 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 Osprey Bitcoin will offset losses from the drop in Osprey Bitcoin's long position.The idea behind Alphabet Inc Class A and Osprey Bitcoin Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Osprey Bitcoin vs. Grayscale Bitcoin Cash | Osprey Bitcoin vs. Grayscale Litecoin Trust | Osprey Bitcoin vs. Grayscale Digital Large | Osprey 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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