Correlation Between Grayscale Bitcoin and Invesco Variable

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

Diversification Opportunities for Grayscale Bitcoin and Invesco Variable

0.8

Correlation Coefficient

Grayscale Bitcoin  Invesco Variable

Very poor diversification

The 3 months correlation between Grayscale and Invesco is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Mini and Invesco Variable Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Variable Rate 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 Invesco Variable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Variable Rate has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Invesco Variable go up and down completely randomly.

Pair Corralation between Grayscale Bitcoin and Invesco Variable

Considering the 90-day investment horizon Grayscale Bitcoin Mini is expected to generate 8.87 times more return on investment than Invesco Variable. However, Grayscale Bitcoin is 8.87 times more volatile than Invesco Variable Rate. It trades about 0.02 of its potential returns per unit of risk. Invesco Variable Rate is currently generating about -0.14 per unit of risk. If you would invest  4,263  in Grayscale Bitcoin Mini on October 10, 2024 and sell it today you would earn a total of  11.00  from holding Grayscale Bitcoin Mini or generate 0.26% return on investment over 90 days.

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

Grayscale Bitcoin Mini  vs.  Invesco Variable Rate

Grayscale Bitcoin Mini

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Bitcoin Mini are ranked lower than 18 (%) 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.

Invesco Variable Rate

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Variable Rate are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Invesco Variable is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Grayscale Bitcoin and Invesco Variable

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

The idea behind Grayscale Bitcoin Mini and Invesco Variable Rate 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.