Correlation Between Grayscale Bitcoin and Alphabet
Can any of the company-specific risk be diversified away by investing in both Grayscale Bitcoin and Alphabet 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 Alphabet 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 Alphabet Class C, you can compare the effects of market volatilities on Grayscale Bitcoin and Alphabet 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 Alphabet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and Alphabet.
Diversification Opportunities for Grayscale Bitcoin and Alphabet
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Grayscale and Alphabet is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and Alphabet Class C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet Class C 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 Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet Class C has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Alphabet go up and down completely randomly.
Pair Corralation between Grayscale Bitcoin and Alphabet
Given the investment horizon of 90 days Grayscale Bitcoin Trust is expected to generate 2.79 times more return on investment than Alphabet. However, Grayscale Bitcoin is 2.79 times more volatile than Alphabet Class C. It trades about 0.2 of its potential returns per unit of risk. Alphabet Class C is currently generating about 0.23 per unit of risk. If you would invest 5,085 in Grayscale Bitcoin Trust on December 29, 2023 and sell it today you would earn a total of 1,034 from holding Grayscale Bitcoin Trust or generate 20.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Grayscale Bitcoin Trust vs. Alphabet Class C
Performance |
Timeline |
Grayscale Bitcoin Trust |
Alphabet Class C |
Grayscale Bitcoin and Alphabet Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Grayscale Bitcoin and Alphabet
The main advantage of trading using opposite Grayscale Bitcoin and Alphabet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Bitcoin position performs unexpectedly, Alphabet 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 Alphabet will offset losses from the drop in Alphabet's long position.Grayscale Bitcoin vs. IShares ESG Aware | Grayscale Bitcoin vs. VanEck Vectors ETF | Grayscale Bitcoin vs. GraniteShares 125x Long | Grayscale Bitcoin vs. ProShares Trust |
Check out your portfolio center.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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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