Correlation Between IShares Ethereum and Grayscale Bitcoin

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

Diversification Opportunities for IShares Ethereum and Grayscale Bitcoin

0.78

Correlation Coefficient

IShares Ethereum  Grayscale Bitcoin

Poor diversification

The 3 months correlation between IShares and Grayscale is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding iShares 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 IShares 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 iShares 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 IShares Ethereum i.e., IShares Ethereum and Grayscale Bitcoin go up and down completely randomly.

Pair Corralation between IShares Ethereum and Grayscale Bitcoin

Given the investment horizon of 90 days iShares Ethereum Trust is expected to under-perform the Grayscale Bitcoin. In addition to that, IShares Ethereum is 1.57 times more volatile than Grayscale Bitcoin Mini. It trades about -0.19 of its total potential returns per unit of risk. Grayscale Bitcoin Mini is currently generating about -0.05 per unit of volatility. If you would invest  4,175  in Grayscale Bitcoin Mini on December 29, 2024 and sell it today you would lose (468.00) from holding Grayscale Bitcoin Mini or give up 11.21% of portfolio value over 90 days.

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

iShares Ethereum Trust  vs.  Grayscale Bitcoin Mini

iShares Ethereum Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Ethereum Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's technical indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Grayscale Bitcoin Mini

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grayscale Bitcoin Mini has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic 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 IShares Ethereum and Grayscale Bitcoin

The main advantage of trading using opposite IShares Ethereum and Grayscale Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 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.

The idea behind iShares Ethereum Trust and Grayscale Bitcoin Mini 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..