Correlation Between Grayscale Ethereum and ProShares Trust

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

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

Diversification Opportunities for Grayscale Ethereum and ProShares Trust

0.98

Correlation Coefficient

Grayscale Ethereum  ProShares Trust

Almost no diversification

The 3 months correlation between Grayscale and ProShares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Ethereum Trust and ProShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Trust 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 Trust are associated (or correlated) with ProShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Trust has no effect on the direction of Grayscale Ethereum i.e., Grayscale Ethereum and ProShares Trust go up and down completely randomly.

Pair Corralation between Grayscale Ethereum and ProShares Trust

Given the investment horizon of 90 days Grayscale Ethereum is expected to generate 1.06 times less return on investment than ProShares Trust. In addition to that, Grayscale Ethereum is 1.19 times more volatile than ProShares Trust. It trades about 0.14 of its total potential returns per unit of risk. ProShares Trust is currently generating about 0.18 per unit of volatility. If you would invest  5,943  in ProShares Trust on October 23, 2024 and sell it today you would earn a total of  2,709  from holding ProShares Trust or generate 45.58% return on investment over 90 days.

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

Grayscale Ethereum Trust  vs.  ProShares Trust

Grayscale Ethereum Trust

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Ethereum Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Grayscale Ethereum exhibited solid returns over the last few months and may actually be approaching a breakup point.

ProShares Trust

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Trust are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, ProShares Trust exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grayscale Ethereum and ProShares Trust

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

The idea behind Grayscale Ethereum Trust and ProShares 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.