Correlation Between WisdomTree CBOE and Grayscale Bitcoin
Can any of the company-specific risk be diversified away by investing in both WisdomTree CBOE 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 WisdomTree CBOE and Grayscale Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree CBOE SP and Grayscale Bitcoin Mini, you can compare the effects of market volatilities on WisdomTree CBOE 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 WisdomTree CBOE with a short position of Grayscale Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree CBOE and Grayscale Bitcoin.
Diversification Opportunities for WisdomTree CBOE and Grayscale Bitcoin
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WisdomTree and Grayscale is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree CBOE SP and Grayscale Bitcoin Mini in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Bitcoin Mini and WisdomTree CBOE 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 WisdomTree CBOE SP 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 Mini has no effect on the direction of WisdomTree CBOE i.e., WisdomTree CBOE and Grayscale Bitcoin go up and down completely randomly.
Pair Corralation between WisdomTree CBOE and Grayscale Bitcoin
Given the investment horizon of 90 days WisdomTree CBOE is expected to generate 11.03 times less return on investment than Grayscale Bitcoin. But when comparing it to its historical volatility, WisdomTree CBOE SP is 7.23 times less risky than Grayscale Bitcoin. It trades about 0.2 of its potential returns per unit of risk. Grayscale Bitcoin Mini is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 3,085 in Grayscale Bitcoin Mini on August 29, 2024 and sell it today you would earn a total of 947.00 from holding Grayscale Bitcoin Mini or generate 30.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree CBOE SP vs. Grayscale Bitcoin Mini
Performance |
| Timeline |
| WisdomTree CBOE SP |
| Grayscale Bitcoin Mini |
WisdomTree CBOE and Grayscale Bitcoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree CBOE and Grayscale Bitcoin
The main advantage of trading using opposite WisdomTree CBOE and Grayscale Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree CBOE 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.| WisdomTree CBOE vs. Invesco SP 500 | WisdomTree CBOE vs. WisdomTree Managed Futures | WisdomTree CBOE vs. SPDR MSCI Emerging | WisdomTree CBOE vs. WisdomTree Dynamic Currency |
| Grayscale Bitcoin vs. ProShares Trust | Grayscale Bitcoin vs. iShares Ethereum Trust | Grayscale Bitcoin vs. ProShares Trust | 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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