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 Trust, 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 Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Ethereum Trust 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 Trust 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 Trust is expected to generate 1.01 times more return on investment than Grayscale Ethereum. However, IShares Ethereum is 1.01 times more volatile than Grayscale Ethereum Trust. It trades about -0.18 of its potential returns per unit of risk. Grayscale Ethereum Trust is currently generating about -0.19 per unit of risk. If you would invest  2,572  in iShares Ethereum Trust on December 30, 2024 and sell it today you would lose (1,156) from holding iShares Ethereum Trust or give up 44.95% of portfolio value 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 Trust

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 uncertain 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 Ethereum Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grayscale Ethereum Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Etf's technical indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

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 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.