Correlation Between Grayscale Bitcoin and Guggenheim Municipal

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

Diversification Opportunities for Grayscale Bitcoin and Guggenheim Municipal

0.39

Correlation Coefficient

Grayscale Bitcoin  Guggenheim Municipal

Weak diversification

The 3 months correlation between Grayscale and Guggenheim is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and Guggenheim Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Municipal 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 Guggenheim Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Municipal has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Guggenheim Municipal go up and down completely randomly.

Pair Corralation between Grayscale Bitcoin and Guggenheim Municipal

Given the investment horizon of 90 days Grayscale Bitcoin Trust is expected to under-perform the Guggenheim Municipal. In addition to that, Grayscale Bitcoin is 13.35 times more volatile than Guggenheim Municipal Income. It trades about -0.13 of its total potential returns per unit of risk. Guggenheim Municipal Income is currently generating about -0.26 per unit of volatility. If you would invest  1,141  in Guggenheim Municipal Income on January 25, 2024 and sell it today you would lose (16.00) from holding Guggenheim Municipal Income or give up 1.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Grayscale Bitcoin Trust  vs.  Guggenheim Municipal Income

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.

Guggenheim Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guggenheim Municipal Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Guggenheim Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grayscale Bitcoin and Guggenheim Municipal

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

The idea behind Grayscale Bitcoin Trust and Guggenheim Municipal Income 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 Transaction History module to view history of all your transactions and understand their impact on performance.