Correlation Between Grayscale Ethereum and Invesco CurrencyShares

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

By analyzing existing cross correlation between Grayscale Ethereum Mini and Invesco CurrencyShares Canadian, you can compare the effects of market volatilities on Grayscale Ethereum and Invesco CurrencyShares 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 Invesco CurrencyShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Ethereum and Invesco CurrencyShares.

Diversification Opportunities for Grayscale Ethereum and Invesco CurrencyShares

-0.29

Correlation Coefficient

Grayscale Ethereum  Invesco CurrencyShares

Very good diversification

The 3 months correlation between Grayscale and Invesco is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Ethereum Mini and Invesco CurrencyShares Canadia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco CurrencyShares 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 Mini are associated (or correlated) with Invesco CurrencyShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco CurrencyShares has no effect on the direction of Grayscale Ethereum i.e., Grayscale Ethereum and Invesco CurrencyShares go up and down completely randomly.

Pair Corralation between Grayscale Ethereum and Invesco CurrencyShares

Considering the 90-day investment horizon Grayscale Ethereum Mini is expected to under-perform the Invesco CurrencyShares. In addition to that, Grayscale Ethereum is 11.01 times more volatile than Invesco CurrencyShares Canadian. It trades about -0.19 of its total potential returns per unit of risk. Invesco CurrencyShares Canadian is currently generating about 0.02 per unit of volatility. If you would invest  6,800  in Invesco CurrencyShares Canadian on December 29, 2024 and sell it today you would earn a total of  34.00  from holding Invesco CurrencyShares Canadian or generate 0.5% return on investment over 90 days.

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

Grayscale Ethereum Mini  vs.  Invesco CurrencyShares Canadia

Grayscale Ethereum Mini

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grayscale Ethereum Mini has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

Invesco CurrencyShares

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco CurrencyShares Canadian are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Invesco CurrencyShares is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Grayscale Ethereum and Invesco CurrencyShares

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

The idea behind Grayscale Ethereum Mini and Invesco CurrencyShares Canadian 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 Global Correlations module to find global opportunities by holding instruments from different markets.