Correlation Between Grayscale Bitcoin and 21shares Core

Can any of the company-specific risk be diversified away by investing in both Grayscale Bitcoin and 21shares Core 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 21shares Core 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 21shares Core Ethereum, you can compare the effects of market volatilities on Grayscale Bitcoin and 21shares Core 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 21shares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and 21shares Core.

Diversification Opportunities for Grayscale Bitcoin and 21shares Core

0.9

Correlation Coefficient

Grayscale Bitcoin  21shares Core

Almost no diversification

The 3 months correlation between Grayscale and 21shares is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and 21shares Core Ethereum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 21shares Core Ethereum 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 21shares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 21shares Core Ethereum has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and 21shares Core go up and down completely randomly.

Pair Corralation between Grayscale Bitcoin and 21shares Core

Given the investment horizon of 90 days Grayscale Bitcoin Trust is expected to generate 0.72 times more return on investment than 21shares Core. However, Grayscale Bitcoin Trust is 1.4 times less risky than 21shares Core. It trades about 0.23 of its potential returns per unit of risk. 21shares Core Ethereum is currently generating about -0.01 per unit of risk. If you would invest  7,371  in Grayscale Bitcoin Trust on October 24, 2024 and sell it today you would earn a total of  934.00  from holding Grayscale Bitcoin Trust or generate 12.67% return on investment over 90 days.

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

Grayscale Bitcoin Trust  vs.  21shares Core Ethereum

Grayscale Bitcoin Trust

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Bitcoin Trust are ranked lower than 16 (%) 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.

21shares Core Ethereum

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 21shares Core Ethereum are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, 21shares Core demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grayscale Bitcoin and 21shares Core

The main advantage of trading using opposite Grayscale Bitcoin and 21shares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Bitcoin position performs unexpectedly, 21shares Core 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 21shares Core will offset losses from the drop in 21shares Core's long position.

The idea behind Grayscale Bitcoin Trust and 21shares Core Ethereum 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..