Correlation Between Grayscale Bitcoin and ProShares Bitcoin

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

Diversification Opportunities for Grayscale Bitcoin and ProShares Bitcoin

0.99

Correlation Coefficient

Grayscale Bitcoin  ProShares Bitcoin

No risk reduction

The 3 months correlation between Grayscale and ProShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Mini and ProShares Bitcoin Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Bitcoin 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 ProShares Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Bitcoin has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and ProShares Bitcoin go up and down completely randomly.

Pair Corralation between Grayscale Bitcoin and ProShares Bitcoin

Considering the 90-day investment horizon Grayscale Bitcoin Mini is expected to generate 0.97 times more return on investment than ProShares Bitcoin. However, Grayscale Bitcoin Mini is 1.03 times less risky than ProShares Bitcoin. It trades about 0.04 of its potential returns per unit of risk. ProShares Bitcoin Strategy is currently generating about 0.03 per unit of risk. If you would invest  4,110  in Grayscale Bitcoin Mini on November 19, 2024 and sell it today you would earn a total of  201.00  from holding Grayscale Bitcoin Mini or generate 4.89% return on investment over 90 days.

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

Grayscale Bitcoin Mini  vs.  ProShares Bitcoin Strategy

Grayscale Bitcoin Mini

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Bitcoin Mini are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Grayscale Bitcoin may actually be approaching a critical reversion point that can send shares even higher in March 2025.

ProShares Bitcoin

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Bitcoin Strategy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, ProShares Bitcoin is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Grayscale Bitcoin and ProShares Bitcoin

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

The idea behind Grayscale Bitcoin Mini and ProShares Bitcoin Strategy 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..