Correlation Between Grayscale Bitcoin and OShares Europe

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

Diversification Opportunities for Grayscale Bitcoin and OShares Europe

-0.61

Correlation Coefficient

Grayscale Bitcoin  OShares Europe

Excellent diversification

The 3 months correlation between Grayscale and OShares is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and OShares Europe Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OShares Europe Quality 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 OShares Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OShares Europe Quality has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and OShares Europe go up and down completely randomly.

Pair Corralation between Grayscale Bitcoin and OShares Europe

Given the investment horizon of 90 days Grayscale Bitcoin Trust is expected to under-perform the OShares Europe. In addition to that, Grayscale Bitcoin is 3.47 times more volatile than OShares Europe Quality. It trades about -0.04 of its total potential returns per unit of risk. OShares Europe Quality is currently generating about 0.21 per unit of volatility. If you would invest  2,754  in OShares Europe Quality on December 22, 2024 and sell it today you would earn a total of  318.00  from holding OShares Europe Quality or generate 11.55% return on investment over 90 days.

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

Grayscale Bitcoin Trust  vs.  OShares Europe Quality

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.

OShares Europe Quality

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in OShares Europe Quality are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, OShares Europe may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Grayscale Bitcoin and OShares Europe

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

The idea behind Grayscale Bitcoin Trust and OShares Europe Quality 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.