Correlation Between ProShares Bitcoin and Grayscale Bitcoin

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

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

Diversification Opportunities for ProShares Bitcoin and Grayscale Bitcoin

1.0

Correlation Coefficient

ProShares Bitcoin  Grayscale Bitcoin

No risk reduction

The 3 months correlation between ProShares and Grayscale is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Bitcoin Strategy 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 ProShares 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 ProShares Bitcoin Strategy 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 ProShares Bitcoin i.e., ProShares Bitcoin and Grayscale Bitcoin go up and down completely randomly.

Pair Corralation between ProShares Bitcoin and Grayscale Bitcoin

Given the investment horizon of 90 days ProShares Bitcoin is expected to generate 1.02 times less return on investment than Grayscale Bitcoin. In addition to that, ProShares Bitcoin is 1.01 times more volatile than Grayscale Bitcoin Mini. It trades about 0.25 of its total potential returns per unit of risk. Grayscale Bitcoin Mini is currently generating about 0.25 per unit of volatility. If you would invest  2,575  in Grayscale Bitcoin Mini on September 2, 2024 and sell it today you would earn a total of  1,734  from holding Grayscale Bitcoin Mini or generate 67.34% return on investment over 90 days.

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

ProShares Bitcoin Strategy  vs.  Grayscale Bitcoin Mini

ProShares Bitcoin

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Bitcoin Strategy are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, ProShares Bitcoin displayed solid returns over the last few months and may actually be approaching a breakup point.

Grayscale Bitcoin Mini

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Bitcoin Mini are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Grayscale Bitcoin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares Bitcoin and Grayscale Bitcoin

The main advantage of trading using opposite ProShares Bitcoin and Grayscale Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Bitcoin 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.

The idea behind ProShares Bitcoin Strategy and Grayscale Bitcoin Mini 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.