Correlation Between WisdomTree Floating and Grayscale Bitcoin
Can any of the company-specific risk be diversified away by investing in both WisdomTree Floating 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 Floating 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 Floating Rate and Grayscale Bitcoin Mini, you can compare the effects of market volatilities on WisdomTree Floating 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 Floating with a short position of Grayscale Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Floating and Grayscale Bitcoin.
Diversification Opportunities for WisdomTree Floating and Grayscale Bitcoin
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WisdomTree and Grayscale is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Floating Rate 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 Floating 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 Floating Rate 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 Floating i.e., WisdomTree Floating and Grayscale Bitcoin go up and down completely randomly.
Pair Corralation between WisdomTree Floating and Grayscale Bitcoin
Given the investment horizon of 90 days WisdomTree Floating is expected to generate 90.05 times less return on investment than Grayscale Bitcoin. But when comparing it to its historical volatility, WisdomTree Floating Rate is 203.39 times less risky than Grayscale Bitcoin. It trades about 0.98 of its potential returns per unit of risk. Grayscale Bitcoin Mini is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 3,030 in Grayscale Bitcoin Mini on August 25, 2024 and sell it today you would earn a total of 1,375 from holding Grayscale Bitcoin Mini or generate 45.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Floating Rate vs. Grayscale Bitcoin Mini
Performance |
| Timeline |
| WisdomTree Floating Rate |
| Grayscale Bitcoin Mini |
WisdomTree Floating and Grayscale Bitcoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Floating and Grayscale Bitcoin
The main advantage of trading using opposite WisdomTree Floating and Grayscale Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Floating 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 Floating vs. iShares Treasury Floating | WisdomTree Floating vs. SPDR Bloomberg Investment | WisdomTree Floating vs. iShares 0 3 Month | WisdomTree Floating vs. SPDR Barclays Short |
| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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