Correlation Between Grayscale Bitcoin and ALLEGION

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

By analyzing existing cross correlation between Grayscale Bitcoin Mini and ALLEGION HLDG INC, you can compare the effects of market volatilities on Grayscale Bitcoin and ALLEGION 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 ALLEGION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and ALLEGION.

Diversification Opportunities for Grayscale Bitcoin and ALLEGION

-0.51

Correlation Coefficient

Grayscale Bitcoin  ALLEGION

Excellent diversification

The 3 months correlation between Grayscale and ALLEGION is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Mini and ALLEGION HLDG INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALLEGION HLDG INC 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 Mini are associated (or correlated) with ALLEGION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALLEGION HLDG INC has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and ALLEGION go up and down completely randomly.

Pair Corralation between Grayscale Bitcoin and ALLEGION

Considering the 90-day investment horizon Grayscale Bitcoin Mini is expected to generate 10.73 times more return on investment than ALLEGION. However, Grayscale Bitcoin is 10.73 times more volatile than ALLEGION HLDG INC. It trades about 0.2 of its potential returns per unit of risk. ALLEGION HLDG INC is currently generating about -0.12 per unit of risk. If you would invest  2,910  in Grayscale Bitcoin Mini on September 27, 2024 and sell it today you would earn a total of  1,475  from holding Grayscale Bitcoin Mini or generate 50.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.48%
Values	Daily Returns

Grayscale Bitcoin Mini  vs.  ALLEGION HLDG INC

Grayscale Bitcoin Mini

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Bitcoin Mini are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Grayscale Bitcoin exhibited solid returns over the last few months and may actually be approaching a breakup point.

ALLEGION HLDG INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALLEGION HLDG INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ALLEGION is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grayscale Bitcoin and ALLEGION

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

The idea behind Grayscale Bitcoin Mini and ALLEGION HLDG INC 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.