Correlation Between Grayscale Bitcoin and ProShares Decline

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

Diversification Opportunities for Grayscale Bitcoin and ProShares Decline

-0.87

Correlation Coefficient

Grayscale Bitcoin  ProShares Decline

Pay attention - limited upside

The 3 months correlation between Grayscale and ProShares is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and ProShares Decline of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Decline 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 ProShares Decline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Decline has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and ProShares Decline go up and down completely randomly.

Pair Corralation between Grayscale Bitcoin and ProShares Decline

Given the investment horizon of 90 days Grayscale Bitcoin Trust is expected to under-perform the ProShares Decline. In addition to that, Grayscale Bitcoin is 2.53 times more volatile than ProShares Decline of. It trades about -0.03 of its total potential returns per unit of risk. ProShares Decline of is currently generating about 0.1 per unit of volatility. If you would invest  1,277  in ProShares Decline of on December 28, 2024 and sell it today you would earn a total of  89.00  from holding ProShares Decline of or generate 6.97% return on investment over 90 days.

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

Grayscale Bitcoin Trust  vs.  ProShares Decline of

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 rather sound basic indicators, Grayscale Bitcoin is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

ProShares Decline

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Decline of are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, ProShares Decline may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Grayscale Bitcoin and ProShares Decline

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

The idea behind Grayscale Bitcoin Trust and ProShares Decline of 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.