Correlation Between Galaxy Digital and Grayscale Ethereum

Can any of the company-specific risk be diversified away by investing in both Galaxy Digital and Grayscale Ethereum 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 Galaxy Digital and Grayscale Ethereum into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Galaxy Digital Holdings and Grayscale Ethereum Trust, you can compare the effects of market volatilities on Galaxy Digital and Grayscale Ethereum 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 Galaxy Digital with a short position of Grayscale Ethereum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Galaxy Digital and Grayscale Ethereum.

Diversification Opportunities for Galaxy Digital and Grayscale Ethereum

0.91

Correlation Coefficient

Galaxy Digital  Grayscale Ethereum

Almost no diversification

The 3 months correlation between Galaxy and Grayscale is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Galaxy Digital Holdings and Grayscale Ethereum Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Ethereum Trust and Galaxy Digital 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 Galaxy Digital Holdings are associated (or correlated) with Grayscale Ethereum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grayscale Ethereum Trust has no effect on the direction of Galaxy Digital i.e., Galaxy Digital and Grayscale Ethereum go up and down completely randomly.

Pair Corralation between Galaxy Digital and Grayscale Ethereum

Assuming the 90 days horizon Galaxy Digital is expected to generate 1.63 times less return on investment than Grayscale Ethereum. In addition to that, Galaxy Digital is 1.12 times more volatile than Grayscale Ethereum Trust. It trades about 0.15 of its total potential returns per unit of risk. Grayscale Ethereum Trust is currently generating about 0.27 per unit of volatility. If you would invest  2,604  in Grayscale Ethereum Trust on September 15, 2024 and sell it today you would earn a total of  686.00  from holding Grayscale Ethereum Trust or generate 26.34% return on investment over 90 days.

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

Galaxy Digital Holdings  vs.  Grayscale Ethereum Trust

Galaxy Digital Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Galaxy Digital Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Galaxy Digital reported solid returns over the last few months and may actually be approaching a breakup point.

Grayscale Ethereum Trust

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Ethereum Trust are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Grayscale Ethereum exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Galaxy Digital and Grayscale Ethereum

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

The idea behind Galaxy Digital Holdings and Grayscale Ethereum Trust 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.