Correlation Between Grayscale Bitcoin and Consumer Staples

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

Diversification Opportunities for Grayscale Bitcoin and Consumer Staples

-0.41

Correlation Coefficient

Grayscale Bitcoin  Consumer Staples

Very good diversification

The 3 months correlation between Grayscale and Consumer is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Mini and Consumer Staples Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Staples Select 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 Consumer Staples. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Staples Select has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Consumer Staples go up and down completely randomly.

Pair Corralation between Grayscale Bitcoin and Consumer Staples

Considering the 90-day investment horizon Grayscale Bitcoin Mini is expected to generate 5.7 times more return on investment than Consumer Staples. However, Grayscale Bitcoin is 5.7 times more volatile than Consumer Staples Select. It trades about 0.25 of its potential returns per unit of risk. Consumer Staples Select is currently generating about 0.02 per unit of risk. If you would invest  2,575  in Grayscale Bitcoin Mini on September 2, 2024 and sell it today you would earn a total of  1,734  from holding Grayscale Bitcoin Mini or generate 67.34% return on investment over 90 days.

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

Grayscale Bitcoin Mini  vs.  Consumer Staples Select

Grayscale Bitcoin Mini

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Bitcoin Mini are ranked lower than 20 (%) 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.

Consumer Staples Select

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Consumer Staples Select are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable essential indicators, Consumer Staples is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Grayscale Bitcoin and Consumer Staples

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

The idea behind Grayscale Bitcoin Mini and Consumer Staples Select 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.