Correlation Between Grayscale Bitcoin and Goldman Sachs

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

Diversification Opportunities for Grayscale Bitcoin and Goldman Sachs

0.54

Correlation Coefficient

Grayscale Bitcoin  Goldman Sachs

Very weak diversification

The 3 months correlation between Grayscale and Goldman is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and Goldman Sachs MarketBeta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs MarketBeta 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs MarketBeta has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Goldman Sachs go up and down completely randomly.

Pair Corralation between Grayscale Bitcoin and Goldman Sachs

Given the investment horizon of 90 days Grayscale Bitcoin Trust is expected to under-perform the Goldman Sachs. In addition to that, Grayscale Bitcoin is 3.13 times more volatile than Goldman Sachs MarketBeta. It trades about -0.05 of its total potential returns per unit of risk. Goldman Sachs MarketBeta is currently generating about -0.07 per unit of volatility. If you would invest  5,125  in Goldman Sachs MarketBeta on December 20, 2024 and sell it today you would lose (215.00) from holding Goldman Sachs MarketBeta or give up 4.2% of portfolio value over 90 days.

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

Grayscale Bitcoin Trust  vs.  Goldman Sachs MarketBeta

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 latest unsteady performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Goldman Sachs MarketBeta

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goldman Sachs MarketBeta has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Goldman Sachs is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grayscale Bitcoin and Goldman Sachs

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

The idea behind Grayscale Bitcoin Trust and Goldman Sachs MarketBeta 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.