Correlation Between Grayscale Bitcoin and VanEck China

Can any of the company-specific risk be diversified away by investing in both Grayscale Bitcoin and VanEck China 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 VanEck China 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 VanEck China Bond, you can compare the effects of market volatilities on Grayscale Bitcoin and VanEck China 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 VanEck China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and VanEck China.

Diversification Opportunities for Grayscale Bitcoin and VanEck China

-0.21

Correlation Coefficient

Grayscale Bitcoin  VanEck China

Very good diversification

The 3 months correlation between Grayscale and VanEck is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and VanEck China Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck China Bond 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 VanEck China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck China Bond has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and VanEck China go up and down completely randomly.

Pair Corralation between Grayscale Bitcoin and VanEck China

Given the investment horizon of 90 days Grayscale Bitcoin Trust is expected to under-perform the VanEck China. In addition to that, Grayscale Bitcoin is 9.89 times more volatile than VanEck China Bond. It trades about -0.05 of its total potential returns per unit of risk. VanEck China Bond is currently generating about 0.02 per unit of volatility. If you would invest  2,199  in VanEck China Bond on December 30, 2024 and sell it today you would earn a total of  6.00  from holding VanEck China Bond or generate 0.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Grayscale Bitcoin Trust  vs.  VanEck China Bond

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.

VanEck China Bond

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck China Bond are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, VanEck China is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Grayscale Bitcoin and VanEck China

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

The idea behind Grayscale Bitcoin Trust and VanEck China Bond 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.