Correlation Between Simplify Equity and Grayscale Bitcoin
Can any of the company-specific risk be diversified away by investing in both Simplify Equity 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 Simplify Equity and Grayscale Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simplify Equity PLUS and Grayscale Bitcoin Trust, you can compare the effects of market volatilities on Simplify Equity 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 Simplify Equity with a short position of Grayscale Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Equity and Grayscale Bitcoin.
Diversification Opportunities for Simplify Equity and Grayscale Bitcoin
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Simplify and Grayscale is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Equity PLUS 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 Simplify Equity 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 Simplify Equity PLUS 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 Simplify Equity i.e., Simplify Equity and Grayscale Bitcoin go up and down completely randomly.
Pair Corralation between Simplify Equity and Grayscale Bitcoin
Given the investment horizon of 90 days Simplify Equity is expected to generate 3.34 times less return on investment than Grayscale Bitcoin. But when comparing it to its historical volatility, Simplify Equity PLUS is 2.99 times less risky than Grayscale Bitcoin. It trades about 0.06 of its potential returns per unit of risk. Grayscale Bitcoin Trust is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 7,542 in Grayscale Bitcoin Trust on September 25, 2024 and sell it today you would earn a total of 303.00 from holding Grayscale Bitcoin Trust or generate 4.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Simplify Equity PLUS vs. Grayscale Bitcoin Trust
Performance |
Timeline |
Simplify Equity PLUS |
Grayscale Bitcoin Trust |
Simplify Equity and Grayscale Bitcoin Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Simplify Equity and Grayscale Bitcoin
The main advantage of trading using opposite Simplify Equity and Grayscale Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simplify Equity 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.Simplify Equity vs. Grayscale Bitcoin Trust | Simplify Equity vs. Siren Nasdaq NexGen | Simplify Equity vs. First Trust Indxx | Simplify Equity vs. VanEck Digital Transformation |
Grayscale Bitcoin vs. Grayscale Ethereum Trust | Grayscale Bitcoin vs. Riot Blockchain | Grayscale Bitcoin vs. Marathon Digital Holdings | Grayscale Bitcoin vs. Coinbase Global |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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