Correlation Between Nasdaq and Grayscale Digital
Can any of the company-specific risk be diversified away by investing in both Nasdaq and Grayscale 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 Nasdaq and Grayscale Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Grayscale Digital Large, you can compare the effects of market volatilities on Nasdaq and Grayscale 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 Nasdaq with a short position of Grayscale Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Grayscale Digital.
Diversification Opportunities for Nasdaq and Grayscale Digital
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nasdaq and Grayscale is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Grayscale Digital Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Digital Large and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Grayscale Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grayscale Digital Large has no effect on the direction of Nasdaq i.e., Nasdaq and Grayscale Digital go up and down completely randomly.
Pair Corralation between Nasdaq and Grayscale Digital
Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.39 times more return on investment than Grayscale Digital. However, Nasdaq Inc is 2.57 times less risky than Grayscale Digital. It trades about -0.08 of its potential returns per unit of risk. Grayscale Digital Large is currently generating about -0.36 per unit of risk. If you would invest 8,146 in Nasdaq Inc on November 28, 2024 and sell it today you would lose (152.00) from holding Nasdaq Inc or give up 1.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq Inc vs. Grayscale Digital Large
Performance |
| Timeline |
| Nasdaq Inc |
| Grayscale Digital Large |
Nasdaq and Grayscale Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and Grayscale Digital
The main advantage of trading using opposite Nasdaq and Grayscale Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Grayscale 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 Grayscale Digital will offset losses from the drop in Grayscale Digital's long position.The idea behind Nasdaq Inc and Grayscale Digital Large 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.| Grayscale Digital vs. Grayscale Litecoin Trust | Grayscale Digital vs. Grayscale Bitcoin Cash | Grayscale Digital vs. Grayscale Ethereum Trust | Grayscale Digital vs. Bitwise 10 Crypto |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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