Correlation Between IShares Bitcoin and Grayscale Bitcoin

Can any of the company-specific risk be diversified away by investing in both IShares Bitcoin and Grayscale Bitcoin 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 IShares Bitcoin and Grayscale Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Bitcoin Trust and Grayscale Bitcoin Trust, you can compare the effects of market volatilities on IShares Bitcoin and Grayscale Bitcoin 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 IShares Bitcoin with a short position of Grayscale Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Bitcoin and Grayscale Bitcoin.

Diversification Opportunities for IShares Bitcoin and Grayscale Bitcoin

0.93

Correlation Coefficient

IShares Bitcoin  Grayscale Bitcoin

Almost no diversification

The 3 months correlation between IShares and Grayscale is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding iShares Bitcoin Trust and Grayscale Bitcoin Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Bitcoin Trust and IShares 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 iShares Bitcoin Trust are associated (or correlated) with Grayscale Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grayscale Bitcoin Trust has no effect on the direction of IShares Bitcoin i.e., IShares Bitcoin and Grayscale Bitcoin go up and down completely randomly.

Pair Corralation between IShares Bitcoin and Grayscale Bitcoin

Given the investment horizon of 90 days iShares Bitcoin Trust is expected to generate 0.99 times more return on investment than Grayscale Bitcoin. However, iShares Bitcoin Trust is 1.01 times less risky than Grayscale Bitcoin. It trades about -0.03 of its potential returns per unit of risk. Grayscale Bitcoin Trust is currently generating about -0.05 per unit of risk. If you would invest  5,355  in iShares Bitcoin Trust on December 29, 2024 and sell it today you would lose (411.00) from holding iShares Bitcoin Trust or give up 7.68% of portfolio value over 90 days.

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

iShares Bitcoin Trust  vs.  Grayscale Bitcoin Trust

iShares Bitcoin Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Bitcoin Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, IShares Bitcoin is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with IShares Bitcoin and Grayscale Bitcoin

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

The idea behind iShares Bitcoin Trust and Grayscale Bitcoin Trust 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.