Correlation Between Grayscale Ethereum and Grayscale Bitcoin
Can any of the company-specific risk be diversified away by investing in both Grayscale Ethereum 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 Grayscale Ethereum and Grayscale Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grayscale Ethereum Trust and Grayscale Bitcoin Mini, you can compare the effects of market volatilities on Grayscale Ethereum 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 Grayscale Ethereum with a short position of Grayscale Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Ethereum and Grayscale Bitcoin.
Diversification Opportunities for Grayscale Ethereum and Grayscale Bitcoin
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Grayscale and Grayscale is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Ethereum Trust and Grayscale Bitcoin Mini in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Bitcoin Mini and Grayscale Ethereum 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 Ethereum Trust 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 Mini has no effect on the direction of Grayscale Ethereum i.e., Grayscale Ethereum and Grayscale Bitcoin go up and down completely randomly.
Pair Corralation between Grayscale Ethereum and Grayscale Bitcoin
Given the investment horizon of 90 days Grayscale Ethereum Trust is expected to generate 0.92 times more return on investment than Grayscale Bitcoin. However, Grayscale Ethereum Trust is 1.08 times less risky than Grayscale Bitcoin. It trades about 0.07 of its potential returns per unit of risk. Grayscale Bitcoin Mini is currently generating about -0.02 per unit of risk. If you would invest 1,927 in Grayscale Ethereum Trust on August 28, 2024 and sell it today you would earn a total of 1,017 from holding Grayscale Ethereum Trust or generate 52.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grayscale Ethereum Trust vs. Grayscale Bitcoin Mini
Performance |
| Timeline |
| Grayscale Ethereum Trust |
| Grayscale Bitcoin Mini |
Grayscale Ethereum and Grayscale Bitcoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grayscale Ethereum and Grayscale Bitcoin
The main advantage of trading using opposite Grayscale Ethereum and Grayscale Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Ethereum 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.| Grayscale Ethereum vs. Grayscale Bitcoin Trust | Grayscale Ethereum vs. Grayscale Litecoin Trust | Grayscale Ethereum vs. Grayscale Digital Large | Grayscale Ethereum vs. Bitwise 10 Crypto |
| Grayscale Bitcoin vs. ProShares Trust | Grayscale Bitcoin vs. iShares Ethereum Trust | Grayscale Bitcoin vs. ProShares Trust | Grayscale Bitcoin vs. Grayscale Ethereum Trust |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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