Correlation Between Grayscale Bitcoin and IShares Treasury

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

Diversification Opportunities for Grayscale Bitcoin and IShares Treasury

-0.79

Correlation Coefficient

Grayscale Bitcoin  IShares Treasury

Pay attention - limited upside

The 3 months correlation between Grayscale and IShares is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Mini and iShares Treasury Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Treasury 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 Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Treasury Bond has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and IShares Treasury go up and down completely randomly.

Pair Corralation between Grayscale Bitcoin and IShares Treasury

Considering the 90-day investment horizon Grayscale Bitcoin Mini is expected to under-perform the IShares Treasury. In addition to that, Grayscale Bitcoin is 5.91 times more volatile than iShares Treasury Bond. It trades about -0.05 of its total potential returns per unit of risk. iShares Treasury Bond is currently generating about 0.09 per unit of volatility. If you would invest  2,235  in iShares Treasury Bond on December 29, 2024 and sell it today you would earn a total of  58.00  from holding iShares Treasury Bond or generate 2.6% 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.  iShares Treasury 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 Treasury Bond

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Treasury Bond are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IShares Treasury is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Grayscale Bitcoin and IShares Treasury

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

The idea behind Grayscale Bitcoin Mini and iShares Treasury 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..