Correlation Between EA Series and Grayscale Bitcoin

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

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

Diversification Opportunities for EA Series and Grayscale Bitcoin

0.94

Correlation Coefficient

EA Series  Grayscale Bitcoin

Almost no diversification

The 3 months correlation between ARKZ and Grayscale is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding EA Series 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 EA Series 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 EA Series 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 EA Series i.e., EA Series and Grayscale Bitcoin go up and down completely randomly.

Pair Corralation between EA Series and Grayscale Bitcoin

Given the investment horizon of 90 days EA Series is expected to generate 1.31 times less return on investment than Grayscale Bitcoin. In addition to that, EA Series is 1.25 times more volatile than Grayscale Bitcoin Trust. It trades about 0.15 of its total potential returns per unit of risk. Grayscale Bitcoin Trust is currently generating about 0.25 per unit of volatility. If you would invest  4,675  in Grayscale Bitcoin Trust on August 30, 2024 and sell it today you would earn a total of  3,007  from holding Grayscale Bitcoin Trust or generate 64.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

EA Series Trust  vs.  Grayscale Bitcoin Trust

EA Series Trust

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EA Series Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward-looking signals, EA Series showed solid returns over the last few months and may actually be approaching a breakup point.

Grayscale Bitcoin Trust

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Bitcoin Trust are ranked lower than 19 (%) 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.

Pair Trading with EA Series and Grayscale Bitcoin

The main advantage of trading using opposite EA Series and Grayscale Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EA Series 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 EA Series 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.