Correlation Between Grayscale Bitcoin and Franklin FTSE

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

Diversification Opportunities for Grayscale Bitcoin and Franklin FTSE

-0.37
  Correlation Coefficient

Very good diversification

The 3 months correlation between Grayscale and Franklin is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and Franklin FTSE China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE China 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 Franklin FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin FTSE China has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Franklin FTSE go up and down completely randomly.

Pair Corralation between Grayscale Bitcoin and Franklin FTSE

Given the investment horizon of 90 days Grayscale Bitcoin Trust is expected to generate 1.92 times more return on investment than Franklin FTSE. However, Grayscale Bitcoin is 1.92 times more volatile than Franklin FTSE China. It trades about 0.22 of its potential returns per unit of risk. Franklin FTSE China is currently generating about -0.04 per unit of risk. If you would invest  5,309  in Grayscale Bitcoin Trust on October 25, 2024 and sell it today you would earn a total of  2,961  from holding Grayscale Bitcoin Trust or generate 55.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Grayscale Bitcoin Trust  vs.  Franklin FTSE China

 Performance 
       Timeline  
Grayscale Bitcoin Trust 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
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.
Franklin FTSE China 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Franklin FTSE China has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Franklin FTSE is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Grayscale Bitcoin and Franklin FTSE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Grayscale Bitcoin and Franklin FTSE

The main advantage of trading using opposite Grayscale Bitcoin and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Bitcoin position performs unexpectedly, Franklin FTSE 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 Franklin FTSE will offset losses from the drop in Franklin FTSE's long position.
The idea behind Grayscale Bitcoin Trust and Franklin FTSE China 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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