Correlation Between Fidelity Advantage and Grayscale Bitcoin

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

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

Diversification Opportunities for Fidelity Advantage and Grayscale Bitcoin

0.96

Correlation Coefficient

Fidelity Advantage  Grayscale Bitcoin

Almost no diversification

The 3 months correlation between Fidelity and Grayscale is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advantage Ether and Grayscale Bitcoin Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Bitcoin Trust and Fidelity Advantage 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 Fidelity Advantage Ether 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 Trust has no effect on the direction of Fidelity Advantage i.e., Fidelity Advantage and Grayscale Bitcoin go up and down completely randomly.

Pair Corralation between Fidelity Advantage and Grayscale Bitcoin

Given the investment horizon of 90 days Fidelity Advantage is expected to generate 1.26 times less return on investment than Grayscale Bitcoin. In addition to that, Fidelity Advantage is 1.34 times more volatile than Grayscale Bitcoin Trust. It trades about 0.08 of its total potential returns per unit of risk. Grayscale Bitcoin Trust is currently generating about 0.13 per unit of volatility. If you would invest  7,217  in Grayscale Bitcoin Trust on September 27, 2024 and sell it today you would earn a total of  628.00  from holding Grayscale Bitcoin Trust or generate 8.7% return on investment over 90 days.

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

Fidelity Advantage Ether  vs.  Grayscale Bitcoin Trust

Fidelity Advantage Ether

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advantage Ether are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Fidelity Advantage demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Grayscale Bitcoin Trust

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Bitcoin Trust are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Grayscale Bitcoin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Advantage and Grayscale Bitcoin

The main advantage of trading using opposite Fidelity Advantage and Grayscale Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Advantage 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 Fidelity Advantage Ether and Grayscale Bitcoin Trust 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.