Correlation Between Bitwise Ethereum and IShares Ethereum

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

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

Diversification Opportunities for Bitwise Ethereum and IShares Ethereum

1.0

Correlation Coefficient

Bitwise Ethereum  IShares Ethereum

No risk reduction

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

Pair Corralation between Bitwise Ethereum and IShares Ethereum

Given the investment horizon of 90 days Bitwise Ethereum is expected to generate 1.01 times less return on investment than IShares Ethereum. But when comparing it to its historical volatility, Bitwise Ethereum ETF is 1.01 times less risky than IShares Ethereum. It trades about 0.16 of its potential returns per unit of risk. iShares Ethereum Trust is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,901  in iShares Ethereum Trust on August 30, 2024 and sell it today you would earn a total of  859.00  from holding iShares Ethereum Trust or generate 45.19% return on investment over 90 days.

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

Bitwise Ethereum ETF  vs.  iShares Ethereum Trust

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.

iShares Ethereum Trust

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Bitwise Ethereum and IShares Ethereum

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

The idea behind Bitwise Ethereum ETF and iShares 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.