Correlation Between Tidal Trust and Grayscale Bitcoin
Can any of the company-specific risk be diversified away by investing in both Tidal Trust 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 Tidal Trust and Grayscale Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tidal Trust II and Grayscale Bitcoin Trust, you can compare the effects of market volatilities on Tidal Trust 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 Tidal Trust with a short position of Grayscale Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and Grayscale Bitcoin.
Diversification Opportunities for Tidal Trust and Grayscale Bitcoin
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Tidal and Grayscale is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and Grayscale Bitcoin Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Bitcoin Trust and Tidal 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 Tidal Trust II 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 Trust has no effect on the direction of Tidal Trust i.e., Tidal Trust and Grayscale Bitcoin go up and down completely randomly.
Pair Corralation between Tidal Trust and Grayscale Bitcoin
Given the investment horizon of 90 days Tidal Trust is expected to generate 2.17 times less return on investment than Grayscale Bitcoin. But when comparing it to its historical volatility, Tidal Trust II is 1.24 times less risky than Grayscale Bitcoin. It trades about 0.18 of its potential returns per unit of risk. Grayscale Bitcoin Trust is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 5,767 in Grayscale Bitcoin Trust on August 30, 2024 and sell it today you would earn a total of 1,915 from holding Grayscale Bitcoin Trust or generate 33.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tidal Trust II vs. Grayscale Bitcoin Trust
Performance |
| Timeline |
| Tidal Trust II |
| Grayscale Bitcoin Trust |
Tidal Trust and Grayscale Bitcoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tidal Trust and Grayscale Bitcoin
The main advantage of trading using opposite Tidal Trust and Grayscale Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal Trust 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.| Tidal Trust vs. Freedom Day Dividend | Tidal Trust vs. Franklin Templeton ETF | Tidal Trust vs. iShares MSCI China | Tidal Trust vs. Tidal Trust II |
| Grayscale Bitcoin vs. Grayscale Ethereum Trust | Grayscale Bitcoin vs. Riot Blockchain | Grayscale Bitcoin vs. Marathon Digital Holdings | Grayscale Bitcoin vs. Coinbase Global |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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