Correlation Between IPath Series and Grayscale Bitcoin
Can any of the company-specific risk be diversified away by investing in both IPath Series 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 IPath Series and Grayscale Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iPath Series B and Grayscale Bitcoin Mini, you can compare the effects of market volatilities on IPath Series 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 IPath Series with a short position of Grayscale Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPath Series and Grayscale Bitcoin.
Diversification Opportunities for IPath Series and Grayscale Bitcoin
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IPath and Grayscale is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding iPath Series B 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 IPath Series 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 iPath Series B 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 IPath Series i.e., IPath Series and Grayscale Bitcoin go up and down completely randomly.
Pair Corralation between IPath Series and Grayscale Bitcoin
Considering the 90-day investment horizon iPath Series B is expected to under-perform the Grayscale Bitcoin. But the etf apears to be less risky and, when comparing its historical volatility, iPath Series B is 1.12 times less risky than Grayscale Bitcoin. The etf trades about -0.23 of its potential returns per unit of risk. The Grayscale Bitcoin Mini is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 3,185 in Grayscale Bitcoin Mini on August 31, 2024 and sell it today you would earn a total of 1,108 from holding Grayscale Bitcoin Mini or generate 34.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iPath Series B vs. Grayscale Bitcoin Mini
Performance |
| Timeline |
| iPath Series B |
| Grayscale Bitcoin Mini |
IPath Series and Grayscale Bitcoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPath Series and Grayscale Bitcoin
The main advantage of trading using opposite IPath Series and Grayscale Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPath Series 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.| IPath Series vs. ProShares Ultra VIX | IPath Series vs. ProShares Short VIX | IPath Series vs. ProShares UltraPro Short | IPath Series vs. iShares 20 Year |
| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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