Correlation Between Grayscale Digital and Bayer Aktiengesellscha

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

By analyzing existing cross correlation between Grayscale Digital Large and Bayer Aktiengesellschaft, you can compare the effects of market volatilities on Grayscale Digital and Bayer Aktiengesellscha 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 Digital with a short position of Bayer Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Digital and Bayer Aktiengesellscha.

Diversification Opportunities for Grayscale Digital and Bayer Aktiengesellscha

-0.6

Correlation Coefficient

Grayscale Digital  Bayer Aktiengesellscha

Excellent diversification

The 3 months correlation between Grayscale and Bayer is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Digital Large and Bayer Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayer Aktiengesellschaft and Grayscale Digital 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 Digital Large are associated (or correlated) with Bayer Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayer Aktiengesellschaft has no effect on the direction of Grayscale Digital i.e., Grayscale Digital and Bayer Aktiengesellscha go up and down completely randomly.

Pair Corralation between Grayscale Digital and Bayer Aktiengesellscha

Given the investment horizon of 90 days Grayscale Digital Large is expected to under-perform the Bayer Aktiengesellscha. In addition to that, Grayscale Digital is 1.53 times more volatile than Bayer Aktiengesellschaft. It trades about -0.14 of its total potential returns per unit of risk. Bayer Aktiengesellschaft is currently generating about 0.0 per unit of volatility. If you would invest  3,066  in Bayer Aktiengesellschaft on February 3, 2024 and sell it today you would lose (20.00) from holding Bayer Aktiengesellschaft or give up 0.65% of portfolio value over 90 days.

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

Grayscale Digital Large  vs.  Bayer Aktiengesellschaft

Grayscale Digital Large

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Digital Large are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Grayscale Digital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bayer Aktiengesellschaft

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bayer Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Bayer Aktiengesellscha is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Grayscale Digital and Bayer Aktiengesellscha

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

The idea behind Grayscale Digital Large and Bayer Aktiengesellschaft 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..