Correlation Between Grayscale Ethereum and Simplify Bitcoin

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

Diversification Opportunities for Grayscale Ethereum and Simplify Bitcoin

0.62

Correlation Coefficient

Grayscale Ethereum  Simplify Bitcoin

Poor diversification

The 3 months correlation between Grayscale and Simplify is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Ethereum Trust and Simplify Bitcoin Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Bitcoin Strategy 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 Simplify Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Bitcoin Strategy has no effect on the direction of Grayscale Ethereum i.e., Grayscale Ethereum and Simplify Bitcoin go up and down completely randomly.

Pair Corralation between Grayscale Ethereum and Simplify Bitcoin

Given the investment horizon of 90 days Grayscale Ethereum Trust is expected to under-perform the Simplify Bitcoin. In addition to that, Grayscale Ethereum is 1.05 times more volatile than Simplify Bitcoin Strategy. It trades about -0.12 of its total potential returns per unit of risk. Simplify Bitcoin Strategy is currently generating about -0.07 per unit of volatility. If you would invest  2,911  in Simplify Bitcoin Strategy on November 28, 2024 and sell it today you would lose (574.00) from holding Simplify Bitcoin Strategy or give up 19.72% of portfolio value over 90 days.

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

Grayscale Ethereum Trust  vs.  Simplify Bitcoin Strategy

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 March 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Simplify Bitcoin Strategy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simplify Bitcoin Strategy 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 basic indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

Pair Trading with Grayscale Ethereum and Simplify Bitcoin

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

The idea behind Grayscale Ethereum Trust and Simplify Bitcoin Strategy 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.