Correlation Between IShares Ethereum and Grayscale Ethereum

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

Diversification Opportunities for IShares Ethereum and Grayscale Ethereum

1.0

Correlation Coefficient

IShares Ethereum  Grayscale Ethereum

No risk reduction

The 3 months correlation between IShares and Grayscale is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Ethereum Trust and Grayscale Ethereum Mini in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Ethereum 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 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 Mini has no effect on the direction of IShares Ethereum i.e., IShares Ethereum and Grayscale Ethereum go up and down completely randomly.

Pair Corralation between IShares Ethereum and Grayscale Ethereum

Given the investment horizon of 90 days IShares Ethereum is expected to generate 1.01 times less return on investment than Grayscale Ethereum. But when comparing it to its historical volatility, iShares Ethereum Trust is 1.01 times less risky than Grayscale Ethereum. It trades about 0.33 of its potential returns per unit of risk. Grayscale Ethereum Mini is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  2,360  in Grayscale Ethereum Mini on September 1, 2024 and sell it today you would earn a total of  1,024  from holding Grayscale Ethereum Mini or generate 43.39% return on investment over 90 days.

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

iShares Ethereum Trust  vs.  Grayscale Ethereum Mini

iShares Ethereum Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Ethereum Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent technical indicators, IShares Ethereum sustained solid returns over the last few months and may actually be approaching a breakup point.

Grayscale Ethereum Mini

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Ethereum Mini are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Grayscale Ethereum demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Ethereum and Grayscale Ethereum

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

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.