Correlation Between Grayscale Ethereum and Bitwise Ethereum

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

Diversification Opportunities for Grayscale Ethereum and Bitwise Ethereum

1.0

Correlation Coefficient

Grayscale Ethereum  Bitwise Ethereum

No risk reduction

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

Pair Corralation between Grayscale Ethereum and Bitwise Ethereum

Given the investment horizon of 90 days Grayscale Ethereum is expected to generate 1.02 times less return on investment than Bitwise Ethereum. But when comparing it to its historical volatility, Grayscale Ethereum Trust is 1.0 times less risky than Bitwise Ethereum. It trades about 0.16 of its potential returns per unit of risk. Bitwise Ethereum ETF is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,755  in Bitwise Ethereum ETF on September 2, 2024 and sell it today you would earn a total of  825.00  from holding Bitwise Ethereum ETF or generate 47.01% 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.  Bitwise Ethereum ETF

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.

Bitwise Ethereum ETF

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Grayscale Ethereum and Bitwise Ethereum

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

The idea behind Grayscale Ethereum Trust and Bitwise 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.