Correlation Between Grayscale Bitcoin and Vanguard Total

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

Diversification Opportunities for Grayscale Bitcoin and Vanguard Total

-0.71

Correlation Coefficient

Grayscale Bitcoin  Vanguard Total

Pay attention - limited upside

The 3 months correlation between Grayscale and Vanguard is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Mini and Vanguard Total Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total 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 Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Bond has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Vanguard Total go up and down completely randomly.

Pair Corralation between Grayscale Bitcoin and Vanguard Total

Considering the 90-day investment horizon Grayscale Bitcoin Mini is expected to generate 11.03 times more return on investment than Vanguard Total. However, Grayscale Bitcoin is 11.03 times more volatile than Vanguard Total Bond. It trades about 0.38 of its potential returns per unit of risk. Vanguard Total Bond is currently generating about 0.13 per unit of risk. If you would invest  3,105  in Grayscale Bitcoin Mini on September 1, 2024 and sell it today you would earn a total of  1,204  from holding Grayscale Bitcoin Mini or generate 38.78% return on investment over 90 days.

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

Grayscale Bitcoin Mini  vs.  Vanguard Total Bond

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.

Vanguard Total Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Total Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Vanguard Total is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Grayscale Bitcoin and Vanguard Total

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

The idea behind Grayscale Bitcoin Mini and Vanguard Total 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..