Correlation Between Grayscale Bitcoin and Valkyrie Bitcoin

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

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

Diversification Opportunities for Grayscale Bitcoin and Valkyrie Bitcoin

1.0

Correlation Coefficient

Grayscale Bitcoin  Valkyrie Bitcoin

No risk reduction

The 3 months correlation between Grayscale and Valkyrie is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and Valkyrie Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valkyrie Bitcoin 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 Trust are associated (or correlated) with Valkyrie Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valkyrie Bitcoin has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Valkyrie Bitcoin go up and down completely randomly.

Pair Corralation between Grayscale Bitcoin and Valkyrie Bitcoin

Given the investment horizon of 90 days Grayscale Bitcoin Trust is expected to under-perform the Valkyrie Bitcoin. In addition to that, Grayscale Bitcoin is 1.0 times more volatile than Valkyrie Bitcoin. It trades about -0.05 of its total potential returns per unit of risk. Valkyrie Bitcoin is currently generating about -0.05 per unit of volatility. If you would invest  2,666  in Valkyrie Bitcoin on December 30, 2024 and sell it today you would lose (298.00) from holding Valkyrie Bitcoin or give up 11.18% of portfolio value over 90 days.

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

Grayscale Bitcoin Trust  vs.  Valkyrie Bitcoin

Grayscale Bitcoin Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grayscale Bitcoin Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady 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.

Valkyrie Bitcoin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Valkyrie Bitcoin has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Etf's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Pair Trading with Grayscale Bitcoin and Valkyrie Bitcoin

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

The idea behind Grayscale Bitcoin Trust and Valkyrie Bitcoin 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.