Correlation Between Grayscale Bitcoin and ProShares UltraShort

Can any of the company-specific risk be diversified away by investing in both Grayscale Bitcoin and ProShares UltraShort 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 ProShares UltraShort 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 ProShares UltraShort SmallCap600, you can compare the effects of market volatilities on Grayscale Bitcoin and ProShares UltraShort 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 ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and ProShares UltraShort.

Diversification Opportunities for Grayscale Bitcoin and ProShares UltraShort

-0.86

Correlation Coefficient

Grayscale Bitcoin  ProShares UltraShort

Pay attention - limited upside

The 3 months correlation between Grayscale and ProShares is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and ProShares UltraShort SmallCap6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort 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 ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and ProShares UltraShort go up and down completely randomly.

Pair Corralation between Grayscale Bitcoin and ProShares UltraShort

Given the investment horizon of 90 days Grayscale Bitcoin Trust is expected to generate 0.85 times more return on investment than ProShares UltraShort. However, Grayscale Bitcoin Trust is 1.17 times less risky than ProShares UltraShort. It trades about 0.15 of its potential returns per unit of risk. ProShares UltraShort SmallCap600 is currently generating about -0.07 per unit of risk. If you would invest  7,442  in Grayscale Bitcoin Trust on May 4, 2025 and sell it today you would earn a total of  1,447  from holding Grayscale Bitcoin Trust or generate 19.44% return on investment over 90 days.

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

Grayscale Bitcoin Trust  vs.  ProShares UltraShort SmallCap6

Grayscale Bitcoin Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Bitcoin Trust are ranked lower than 12 (%) 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.

ProShares UltraShort

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares UltraShort SmallCap600 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Grayscale Bitcoin and ProShares UltraShort

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

The idea behind Grayscale Bitcoin Trust and ProShares UltraShort SmallCap600 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .