Correlation Between Grayscale Bitcoin and Dimensional ETF
Can any of the company-specific risk be diversified away by investing in both Grayscale Bitcoin and Dimensional ETF 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 Dimensional ETF 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 Dimensional ETF Trust, you can compare the effects of market volatilities on Grayscale Bitcoin and Dimensional ETF 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 Dimensional ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and Dimensional ETF.
Diversification Opportunities for Grayscale Bitcoin and Dimensional ETF
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Grayscale and Dimensional is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and Dimensional ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional ETF Trust 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 Dimensional ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional ETF Trust has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Dimensional ETF go up and down completely randomly.
Pair Corralation between Grayscale Bitcoin and Dimensional ETF
Given the investment horizon of 90 days Grayscale Bitcoin Trust is expected to generate 2.92 times more return on investment than Dimensional ETF. However, Grayscale Bitcoin is 2.92 times more volatile than Dimensional ETF Trust. It trades about 0.28 of its potential returns per unit of risk. Dimensional ETF Trust is currently generating about 0.02 per unit of risk. If you would invest 4,614 in Grayscale Bitcoin Trust on September 14, 2024 and sell it today you would earn a total of 3,463 from holding Grayscale Bitcoin Trust or generate 75.05% 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. Dimensional ETF Trust
Performance |
Timeline |
Grayscale Bitcoin Trust |
Dimensional ETF Trust |
Grayscale Bitcoin and Dimensional ETF Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Grayscale Bitcoin and Dimensional ETF
The main advantage of trading using opposite Grayscale Bitcoin and Dimensional ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Bitcoin position performs unexpectedly, Dimensional ETF 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 Dimensional ETF will offset losses from the drop in Dimensional ETF'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 |
Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional International Value | Dimensional ETF vs. Dimensional ETF Trust |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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