Correlation Between Grayscale Bitcoin and Grayscale Stellar

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

Diversification Opportunities for Grayscale Bitcoin and Grayscale Stellar

0.68

Correlation Coefficient

Grayscale Bitcoin  Grayscale Stellar

Poor diversification

The 3 months correlation between Grayscale and Grayscale is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Cash and Grayscale Stellar Lumens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Stellar Lumens 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 Grayscale Stellar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grayscale Stellar Lumens has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Grayscale Stellar go up and down completely randomly.

Pair Corralation between Grayscale Bitcoin and Grayscale Stellar

Given the investment horizon of 90 days Grayscale Bitcoin Cash is expected to under-perform the Grayscale Stellar. But the otc stock apears to be less risky and, when comparing its historical volatility, Grayscale Bitcoin Cash is 1.39 times less risky than Grayscale Stellar. The otc stock trades about -0.19 of its potential returns per unit of risk. The Grayscale Stellar Lumens is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  4,225  in Grayscale Stellar Lumens on December 22, 2024 and sell it today you would lose (930.00) from holding Grayscale Stellar Lumens or give up 22.01% of portfolio value over 90 days.

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

Grayscale Bitcoin Cash  vs.  Grayscale Stellar Lumens

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.

Grayscale Stellar Lumens

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grayscale Stellar Lumens has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Grayscale Bitcoin and Grayscale Stellar

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

The idea behind Grayscale Bitcoin Cash and Grayscale Stellar Lumens 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.