Correlation Between Grayscale Bitcoin and Valkyrie Bitcoin

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

Diversification Opportunities for Grayscale Bitcoin and Valkyrie Bitcoin

1.0

Correlation Coefficient

Grayscale Bitcoin  Valkyrie Bitcoin

No risk reduction

The 3 months correlation between Grayscale and Valkyrie is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Mini and Valkyrie Bitcoin Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valkyrie Bitcoin Futures 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 Valkyrie Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valkyrie Bitcoin Futures has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Valkyrie Bitcoin go up and down completely randomly.

Pair Corralation between Grayscale Bitcoin and Valkyrie Bitcoin

Considering the 90-day investment horizon Grayscale Bitcoin is expected to generate 1.79 times less return on investment than Valkyrie Bitcoin. But when comparing it to its historical volatility, Grayscale Bitcoin Mini is 2.01 times less risky than Valkyrie Bitcoin. It trades about 0.18 of its potential returns per unit of risk. Valkyrie Bitcoin Futures is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  5,249  in Valkyrie Bitcoin Futures on September 14, 2024 and sell it today you would earn a total of  962.00  from holding Valkyrie Bitcoin Futures or generate 18.33% 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.  Valkyrie Bitcoin Futures

Grayscale Bitcoin Mini

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Bitcoin Mini are ranked lower than 21 (%) 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.

Valkyrie Bitcoin Futures

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Valkyrie Bitcoin Futures are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, Valkyrie Bitcoin showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grayscale Bitcoin and Valkyrie Bitcoin

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

The idea behind Grayscale Bitcoin Mini and Valkyrie Bitcoin Futures 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 Global Correlations module to find global opportunities by holding instruments from different markets.