Correlation Between Grayscale Litecoin Trust and Galaxy Digital
Can any of the company-specific risk be diversified away by investing in both Grayscale Litecoin Trust and Galaxy Digital 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 Litecoin Trust and Galaxy Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grayscale Litecoin Trust and Galaxy Digital Holdings, you can compare the effects of market volatilities on Grayscale Litecoin Trust and Galaxy Digital 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 Litecoin Trust with a short position of Galaxy Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Litecoin Trust and Galaxy Digital.
Diversification Opportunities for Grayscale Litecoin Trust and Galaxy Digital
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grayscale and Galaxy is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Litecoin Trust and Galaxy Digital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galaxy Digital Holdings and Grayscale Litecoin Trust 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 Litecoin Trust are associated (or correlated) with Galaxy Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galaxy Digital Holdings has no effect on the direction of Grayscale Litecoin Trust i.e., Grayscale Litecoin Trust and Galaxy Digital go up and down completely randomly.
Pair Corralation between Grayscale Litecoin Trust and Galaxy Digital
Given the investment horizon of 90 days Grayscale Litecoin Trust is expected to generate 4.67 times less return on investment than Galaxy Digital. In addition to that, Grayscale Litecoin Trust is 1.16 times more volatile than Galaxy Digital Holdings. It trades about 0.03 of its total potential returns per unit of risk. Galaxy Digital Holdings is currently generating about 0.15 per unit of volatility. If you would invest 1,279 in Galaxy Digital Holdings on August 30, 2024 and sell it today you would earn a total of 503.00 from holding Galaxy Digital Holdings or generate 39.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grayscale Litecoin Trust vs. Galaxy Digital Holdings
Performance |
| Timeline |
| Grayscale Litecoin Trust |
| Galaxy Digital Holdings |
Grayscale Litecoin Trust and Galaxy Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grayscale Litecoin Trust and Galaxy Digital
The main advantage of trading using opposite Grayscale Litecoin Trust and Galaxy Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Litecoin Trust position performs unexpectedly, Galaxy Digital 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 Galaxy Digital will offset losses from the drop in Galaxy Digital's long position.The idea behind Grayscale Litecoin Trust and Galaxy Digital Holdings 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.
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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