Correlation Between Grayscale Bitcoin and Tortoise Capital

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

Diversification Opportunities for Grayscale Bitcoin and Tortoise Capital

0.88

Correlation Coefficient

Grayscale Bitcoin  Tortoise Capital

Very poor diversification

The 3 months correlation between Grayscale and Tortoise is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and Tortoise Capital Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tortoise Capital Series 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 Tortoise Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tortoise Capital Series has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Tortoise Capital go up and down completely randomly.

Pair Corralation between Grayscale Bitcoin and Tortoise Capital

Given the investment horizon of 90 days Grayscale Bitcoin Trust is expected to generate 3.95 times more return on investment than Tortoise Capital. However, Grayscale Bitcoin is 3.95 times more volatile than Tortoise Capital Series. It trades about 0.12 of its potential returns per unit of risk. Tortoise Capital Series is currently generating about 0.18 per unit of risk. If you would invest  1,919  in Grayscale Bitcoin Trust on October 22, 2024 and sell it today you would earn a total of  6,386  from holding Grayscale Bitcoin Trust or generate 332.78% return on investment over 90 days.

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

Grayscale Bitcoin Trust  vs.  Tortoise Capital Series

Grayscale Bitcoin Trust

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Bitcoin Trust are ranked lower than 16 (%) 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.

Tortoise Capital Series

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tortoise Capital Series are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Tortoise Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grayscale Bitcoin and Tortoise Capital

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

The idea behind Grayscale Bitcoin Trust and Tortoise Capital Series 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.