Correlation Between Grayscale Bitcoin and Invesco China

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

Diversification Opportunities for Grayscale Bitcoin and Invesco China

-0.51

Correlation Coefficient

Grayscale Bitcoin  Invesco China

Excellent diversification

The 3 months correlation between Grayscale and Invesco is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and Invesco China Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco China Technology 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 China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco China Technology has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Invesco China go up and down completely randomly.

Pair Corralation between Grayscale Bitcoin and Invesco China

Given the investment horizon of 90 days Grayscale Bitcoin Trust is expected to generate 1.38 times more return on investment than Invesco China. However, Grayscale Bitcoin is 1.38 times more volatile than Invesco China Technology. It trades about 0.06 of its potential returns per unit of risk. Invesco China Technology is currently generating about 0.05 per unit of risk. If you would invest  5,955  in Grayscale Bitcoin Trust on October 9, 2024 and sell it today you would earn a total of  1,690  from holding Grayscale Bitcoin Trust or generate 28.38% return on investment over 90 days.

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

Grayscale Bitcoin Trust  vs.  Invesco China Technology

Grayscale Bitcoin Trust

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Bitcoin Trust are ranked lower than 17 (%) 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.

Invesco China Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco China Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak 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 Invesco China

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

The idea behind Grayscale Bitcoin Trust and Invesco China Technology 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.