Correlation Between Grayscale Bitcoin and Invesco Galaxy
Can any of the company-specific risk be diversified away by investing in both Grayscale Bitcoin and Invesco Galaxy 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 Galaxy 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 Invesco Galaxy Bitcoin, you can compare the effects of market volatilities on Grayscale Bitcoin and Invesco Galaxy 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 Galaxy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and Invesco Galaxy.
Diversification Opportunities for Grayscale Bitcoin and Invesco Galaxy
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Grayscale and Invesco is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and Invesco Galaxy Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Galaxy 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 Invesco Galaxy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Galaxy Bitcoin has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Invesco Galaxy go up and down completely randomly.
Pair Corralation between Grayscale Bitcoin and Invesco Galaxy
Given the investment horizon of 90 days Grayscale Bitcoin Trust is expected to under-perform the Invesco Galaxy. In addition to that, Grayscale Bitcoin is 1.01 times more volatile than Invesco Galaxy Bitcoin. It trades about -0.05 of its total potential returns per unit of risk. Invesco Galaxy Bitcoin is currently generating about -0.05 per unit of volatility. If you would invest 9,423 in Invesco Galaxy Bitcoin on December 30, 2024 and sell it today you would lose (1,052) from holding Invesco Galaxy Bitcoin or give up 11.16% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Grayscale Bitcoin Trust vs. Invesco Galaxy Bitcoin
Performance |
Timeline |
Grayscale Bitcoin Trust |
Invesco Galaxy Bitcoin |
Grayscale Bitcoin and Invesco Galaxy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Grayscale Bitcoin and Invesco Galaxy
The main advantage of trading using opposite Grayscale Bitcoin and Invesco Galaxy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Bitcoin position performs unexpectedly, Invesco Galaxy 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 Galaxy will offset losses from the drop in Invesco Galaxy's long position.Grayscale Bitcoin vs. Grayscale Ethereum Trust | Grayscale Bitcoin vs. Riot Blockchain | Grayscale Bitcoin vs. Marathon Digital Holdings | Grayscale Bitcoin vs. Coinbase Global |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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