Correlation Between Grayscale Litecoin Trust and Bitwise 10

Can any of the company-specific risk be diversified away by investing in both Grayscale Litecoin Trust and Bitwise 10 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 Litecoin Trust and Bitwise 10 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grayscale Litecoin Trust and Bitwise 10 Crypto, you can compare the effects of market volatilities on Grayscale Litecoin Trust and Bitwise 10 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 Litecoin Trust with a short position of Bitwise 10. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Litecoin Trust and Bitwise 10.

Diversification Opportunities for Grayscale Litecoin Trust and Bitwise 10

0.68

Correlation Coefficient

Grayscale Litecoin Trust  Bitwise 10

Poor diversification

The 3 months correlation between Grayscale and Bitwise is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Litecoin Trust and Bitwise 10 Crypto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitwise 10 Crypto and Grayscale Litecoin Trust 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 Litecoin Trust are associated (or correlated) with Bitwise 10. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitwise 10 Crypto has no effect on the direction of Grayscale Litecoin Trust i.e., Grayscale Litecoin Trust and Bitwise 10 go up and down completely randomly.

Pair Corralation between Grayscale Litecoin Trust and Bitwise 10

Given the investment horizon of 90 days Grayscale Litecoin Trust is expected to under-perform the Bitwise 10. In addition to that, Grayscale Litecoin Trust is 2.07 times more volatile than Bitwise 10 Crypto. It trades about -0.11 of its total potential returns per unit of risk. Bitwise 10 Crypto is currently generating about -0.07 per unit of volatility. If you would invest  6,042  in Bitwise 10 Crypto on December 30, 2024 and sell it today you would lose (992.00) from holding Bitwise 10 Crypto or give up 16.42% of portfolio value over 90 days.

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

Grayscale Litecoin Trust  vs.  Bitwise 10 Crypto

Grayscale Litecoin Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grayscale Litecoin Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Bitwise 10 Crypto

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitwise 10 Crypto has generated negative risk-adjusted returns adding no value to fund investors. In spite of unsteady performance in the last few months, the Fund's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the fund sophisticated investors.

Pair Trading with Grayscale Litecoin Trust and Bitwise 10

The main advantage of trading using opposite Grayscale Litecoin Trust and Bitwise 10 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Litecoin Trust position performs unexpectedly, Bitwise 10 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 Bitwise 10 will offset losses from the drop in Bitwise 10's long position.

The idea behind Grayscale Litecoin Trust and Bitwise 10 Crypto 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.