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 Futures, 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

0.85

Correlation Coefficient

Grayscale Bitcoin  Valkyrie Bitcoin

Very poor diversification

The 3 months correlation between Grayscale and Valkyrie is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and Valkyrie Bitcoin Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valkyrie Bitcoin Futures 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 Futures 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 generate 0.5 times more return on investment than Valkyrie Bitcoin. However, Grayscale Bitcoin Trust is 2.0 times less risky than Valkyrie Bitcoin. It trades about -0.06 of its potential returns per unit of risk. Valkyrie Bitcoin Futures is currently generating about -0.1 per unit of risk. If you would invest  7,603  in Grayscale Bitcoin Trust on December 1, 2024 and sell it today you would lose (942.00) from holding Grayscale Bitcoin Trust or give up 12.39% 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.  Valkyrie Bitcoin Futures

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 Futures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Valkyrie Bitcoin Futures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF 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 Futures 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.