Correlation Between Grayscale Bitcoin and IShares Agency

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

By analyzing existing cross correlation between Grayscale Bitcoin Mini and iShares Agency Bond, you can compare the effects of market volatilities on Grayscale Bitcoin and IShares Agency 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 IShares Agency. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and IShares Agency.

Diversification Opportunities for Grayscale Bitcoin and IShares Agency

-0.35

Correlation Coefficient

Grayscale Bitcoin  IShares Agency

Very good diversification

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

Pair Corralation between Grayscale Bitcoin and IShares Agency

Considering the 90-day investment horizon Grayscale Bitcoin Mini is expected to under-perform the IShares Agency. In addition to that, Grayscale Bitcoin is 14.57 times more volatile than iShares Agency Bond. It trades about -0.06 of its total potential returns per unit of risk. iShares Agency Bond is currently generating about 0.1 per unit of volatility. If you would invest  10,820  in iShares Agency Bond on December 1, 2024 and sell it today you would earn a total of  128.00  from holding iShares Agency Bond or generate 1.18% return on investment over 90 days.

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

Grayscale Bitcoin Mini  vs.  iShares Agency Bond

Grayscale Bitcoin Mini

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grayscale Bitcoin Mini has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

iShares Agency Bond

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Agency Bond are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, IShares Agency is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grayscale Bitcoin and IShares Agency

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

The idea behind Grayscale Bitcoin Mini and iShares Agency Bond 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .