Correlation Between Grayscale Bitcoin and Galaxy Digital

Can any of the company-specific risk be diversified away by investing in both Grayscale Bitcoin and Galaxy Digital 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 Galaxy Digital 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 Galaxy Digital Holdings, you can compare the effects of market volatilities on Grayscale Bitcoin and Galaxy Digital 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 Galaxy Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and Galaxy Digital.

Diversification Opportunities for Grayscale Bitcoin and Galaxy Digital

0.35

Correlation Coefficient

Grayscale Bitcoin  Galaxy Digital

Weak diversification

The 3 months correlation between Grayscale and Galaxy is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Cash and Galaxy Digital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galaxy Digital Holdings 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 Galaxy Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galaxy Digital Holdings has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Galaxy Digital go up and down completely randomly.

Pair Corralation between Grayscale Bitcoin and Galaxy Digital

Given the investment horizon of 90 days Grayscale Bitcoin Cash is expected to under-perform the Galaxy Digital. In addition to that, Grayscale Bitcoin is 1.05 times more volatile than Galaxy Digital Holdings. It trades about -0.29 of its total potential returns per unit of risk. Galaxy Digital Holdings is currently generating about -0.11 per unit of volatility. If you would invest  1,972  in Galaxy Digital Holdings on December 4, 2024 and sell it today you would lose (652.00) from holding Galaxy Digital Holdings or give up 33.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Grayscale Bitcoin Cash  vs.  Galaxy Digital Holdings

Grayscale Bitcoin Cash

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grayscale Bitcoin Cash has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Galaxy Digital Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Galaxy Digital Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Grayscale Bitcoin and Galaxy Digital

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

The idea behind Grayscale Bitcoin Cash and Galaxy Digital Holdings 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.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.