Correlation Between Grayscale Ethereum and VanEck Ethereum

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

Diversification Opportunities for Grayscale Ethereum and VanEck Ethereum

1.0

Correlation Coefficient

Grayscale Ethereum  VanEck Ethereum

No risk reduction

The 3 months correlation between Grayscale and VanEck is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Ethereum Trust and VanEck Ethereum ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Ethereum ETF 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 VanEck Ethereum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Ethereum ETF has no effect on the direction of Grayscale Ethereum i.e., Grayscale Ethereum and VanEck Ethereum go up and down completely randomly.

Pair Corralation between Grayscale Ethereum and VanEck Ethereum

Given the investment horizon of 90 days Grayscale Ethereum Trust is expected to under-perform the VanEck Ethereum. But the otc etf apears to be less risky and, when comparing its historical volatility, Grayscale Ethereum Trust is 1.0 times less risky than VanEck Ethereum. The otc etf trades about -0.19 of its potential returns per unit of risk. The VanEck Ethereum ETF is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest  4,974  in VanEck Ethereum ETF on December 30, 2024 and sell it today you would lose (2,235) from holding VanEck Ethereum ETF or give up 44.93% of portfolio value over 90 days.

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

Grayscale Ethereum Trust  vs.  VanEck Ethereum ETF

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.

VanEck Ethereum ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck Ethereum ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's technical indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the fund sophisticated investors.

Pair Trading with Grayscale Ethereum and VanEck Ethereum

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

The idea behind Grayscale Ethereum Trust and VanEck Ethereum ETF 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.