Correlation Between Grayscale Bitcoin and Bitwise 10

Can any of the company-specific risk be diversified away by investing in both Grayscale Bitcoin and Bitwise 10 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 Grayscale Bitcoin and Bitwise 10 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grayscale Bitcoin Cash and Bitwise 10 Crypto, you can compare the effects of market volatilities on Grayscale Bitcoin and Bitwise 10 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 Grayscale Bitcoin with a short position of Bitwise 10. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and Bitwise 10.

Diversification Opportunities for Grayscale Bitcoin and Bitwise 10

0.43

Correlation Coefficient

Grayscale Bitcoin  Bitwise 10

Very weak diversification

The 3 months correlation between Grayscale and Bitwise is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Cash and Bitwise 10 Crypto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitwise 10 Crypto and Grayscale Bitcoin 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 Grayscale Bitcoin Cash are associated (or correlated) with Bitwise 10. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitwise 10 Crypto has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Bitwise 10 go up and down completely randomly.

Pair Corralation between Grayscale Bitcoin and Bitwise 10

Given the investment horizon of 90 days Grayscale Bitcoin is expected to generate 2.89 times less return on investment than Bitwise 10. In addition to that, Grayscale Bitcoin is 2.17 times more volatile than Bitwise 10 Crypto. It trades about 0.06 of its total potential returns per unit of risk. Bitwise 10 Crypto is currently generating about 0.35 per unit of volatility. If you would invest  3,003  in Bitwise 10 Crypto on September 3, 2024 and sell it today you would earn a total of  3,422  from holding Bitwise 10 Crypto or generate 113.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Grayscale Bitcoin Cash  vs.  Bitwise 10 Crypto

Grayscale Bitcoin Cash

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Bitcoin Cash are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical indicators, Grayscale Bitcoin reported solid returns over the last few months and may actually be approaching a breakup point.

Bitwise 10 Crypto

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Bitwise 10 Crypto are ranked lower than 27 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unsteady basic indicators, Bitwise 10 showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grayscale Bitcoin and Bitwise 10

The main advantage of trading using opposite Grayscale Bitcoin and Bitwise 10 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Bitcoin position performs unexpectedly, Bitwise 10 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 Bitwise 10 will offset losses from the drop in Bitwise 10's long position.

The idea behind Grayscale Bitcoin Cash and Bitwise 10 Crypto 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..