Correlation Between SPDR Galaxy and Grayscale Bitcoin

Can any of the company-specific risk be diversified away by investing in both SPDR Galaxy and Grayscale 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 SPDR Galaxy and Grayscale Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SPDR Galaxy Digital and Grayscale Bitcoin Mini, you can compare the effects of market volatilities on SPDR Galaxy and Grayscale 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 SPDR Galaxy with a short position of Grayscale Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Galaxy and Grayscale Bitcoin.

Diversification Opportunities for SPDR Galaxy and Grayscale Bitcoin

0.72

Correlation Coefficient

SPDR Galaxy  Grayscale Bitcoin

Poor diversification

The 3 months correlation between SPDR and Grayscale is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Galaxy Digital and Grayscale Bitcoin Mini in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Bitcoin Mini and SPDR Galaxy 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 SPDR Galaxy Digital are associated (or correlated) with Grayscale Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grayscale Bitcoin Mini has no effect on the direction of SPDR Galaxy i.e., SPDR Galaxy and Grayscale Bitcoin go up and down completely randomly.

Pair Corralation between SPDR Galaxy and Grayscale Bitcoin

Given the investment horizon of 90 days SPDR Galaxy Digital is expected to under-perform the Grayscale Bitcoin. In addition to that, SPDR Galaxy is 1.29 times more volatile than Grayscale Bitcoin Mini. It trades about -0.03 of its total potential returns per unit of risk. Grayscale Bitcoin Mini is currently generating about 0.02 per unit of volatility. 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	Significant
Accuracy	95.24%
Values	Daily Returns

SPDR Galaxy Digital  vs.  Grayscale Bitcoin Mini

SPDR Galaxy Digital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Galaxy Digital are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, SPDR Galaxy displayed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with SPDR Galaxy and Grayscale Bitcoin

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

The idea behind SPDR Galaxy Digital and Grayscale Bitcoin Mini 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 Transaction History module to view history of all your transactions and understand their impact on performance.