Correlation Between Grayscale Bitcoin and Alerian MLP

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

Diversification Opportunities for Grayscale Bitcoin and Alerian MLP

-0.26

Correlation Coefficient

Grayscale Bitcoin  Alerian MLP

Very good diversification

The 3 months correlation between Grayscale and Alerian is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Mini and Alerian MLP ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alerian MLP ETF 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 Alerian MLP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alerian MLP ETF has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Alerian MLP go up and down completely randomly.

Pair Corralation between Grayscale Bitcoin and Alerian MLP

Considering the 90-day investment horizon Grayscale Bitcoin Mini is expected to under-perform the Alerian MLP. In addition to that, Grayscale Bitcoin is 3.03 times more volatile than Alerian MLP ETF. It trades about -0.04 of its total potential returns per unit of risk. Alerian MLP ETF is currently generating about 0.18 per unit of volatility. If you would invest  4,706  in Alerian MLP ETF on December 21, 2024 and sell it today you would earn a total of  517.00  from holding Alerian MLP ETF or generate 10.99% 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.  Alerian MLP ETF

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.

Alerian MLP ETF

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alerian MLP ETF are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively sluggish essential indicators, Alerian MLP may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Grayscale Bitcoin and Alerian MLP

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

The idea behind Grayscale Bitcoin Mini and Alerian MLP ETF 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.