Correlation Between Grayscale Bitcoin and IShares Blockchain

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

Diversification Opportunities for Grayscale Bitcoin and IShares Blockchain

0.94

Correlation Coefficient

Grayscale Bitcoin  IShares Blockchain

Almost no diversification

The 3 months correlation between Grayscale and IShares is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Mini and iShares Blockchain and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Blockchain and 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 Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Blockchain and has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and IShares Blockchain go up and down completely randomly.

Pair Corralation between Grayscale Bitcoin and IShares Blockchain

Considering the 90-day investment horizon Grayscale Bitcoin Mini is expected to generate 0.76 times more return on investment than IShares Blockchain. However, Grayscale Bitcoin Mini is 1.32 times less risky than IShares Blockchain. It trades about -0.01 of its potential returns per unit of risk. iShares Blockchain and is currently generating about -0.04 per unit of risk. If you would invest  4,360  in Grayscale Bitcoin Mini on September 22, 2024 and sell it today you would lose (89.00) from holding Grayscale Bitcoin Mini or give up 2.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

Grayscale Bitcoin Mini  vs.  iShares Blockchain and

Grayscale Bitcoin Mini

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Bitcoin Mini are ranked lower than 16 (%) 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.

iShares Blockchain and

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Blockchain and are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, IShares Blockchain exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grayscale Bitcoin and IShares Blockchain

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

The idea behind Grayscale Bitcoin Mini and iShares Blockchain and 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.