Correlation Between Grayscale Bitcoin and Simplify Bitcoin

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

Diversification Opportunities for Grayscale Bitcoin and Simplify Bitcoin

0.97

Correlation Coefficient

Grayscale Bitcoin  Simplify Bitcoin

Almost no diversification

The 3 months correlation between Grayscale and Simplify is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and Simplify Bitcoin Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Bitcoin Strategy 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 Simplify Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Bitcoin Strategy has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Simplify Bitcoin go up and down completely randomly.

Pair Corralation between Grayscale Bitcoin and Simplify Bitcoin

Given the investment horizon of 90 days Grayscale Bitcoin Trust is expected to generate 0.9 times more return on investment than Simplify Bitcoin. However, Grayscale Bitcoin Trust is 1.11 times less risky than Simplify Bitcoin. It trades about 0.11 of its potential returns per unit of risk. Simplify Bitcoin Strategy is currently generating about 0.08 per unit of risk. If you would invest  1,500  in Grayscale Bitcoin Trust on February 3, 2025 and sell it today you would earn a total of  6,155  from holding Grayscale Bitcoin Trust or generate 410.33% return on investment over 90 days.

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

Grayscale Bitcoin Trust  vs.  Simplify Bitcoin Strategy

Grayscale Bitcoin Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grayscale Bitcoin Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Grayscale Bitcoin is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Simplify Bitcoin Strategy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Bitcoin Strategy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Simplify Bitcoin may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Pair Trading with Grayscale Bitcoin and Simplify Bitcoin

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

The idea behind Grayscale Bitcoin Trust and Simplify Bitcoin Strategy 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.