Correlation Between ProShares Trust and Grayscale Ethereum

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

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

Diversification Opportunities for ProShares Trust and Grayscale Ethereum

-0.97

Correlation Coefficient

ProShares Trust  Grayscale Ethereum

Pay attention - limited upside

The 3 months correlation between ProShares and Grayscale is -0.97. Overlapping area represents the amount of risk that can be diversified away by holding ProShares 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 ProShares Trust 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 ProShares 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 ProShares Trust i.e., ProShares Trust and Grayscale Ethereum go up and down completely randomly.

Pair Corralation between ProShares Trust and Grayscale Ethereum

Given the investment horizon of 90 days ProShares Trust is expected to under-perform the Grayscale Ethereum. In addition to that, ProShares Trust is 1.99 times more volatile than Grayscale Ethereum Trust. It trades about -0.17 of its total potential returns per unit of risk. Grayscale Ethereum Trust is currently generating about 0.16 per unit of volatility. If you would invest  2,064  in Grayscale Ethereum Trust on September 2, 2024 and sell it today you would earn a total of  951.00  from holding Grayscale Ethereum Trust or generate 46.08% return on investment over 90 days.

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

ProShares Trust  vs.  Grayscale Ethereum Trust

ProShares Trust

Risk-Adjusted Performance

0 of 100

Very Weak

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

Grayscale Ethereum Trust

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with ProShares Trust and Grayscale Ethereum

The main advantage of trading using opposite ProShares Trust and Grayscale Ethereum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Trust 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 ProShares 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.