Correlation Between Grayscale Bitcoin and Franklin Ethereum

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

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

Diversification Opportunities for Grayscale Bitcoin and Franklin Ethereum

0.32

Correlation Coefficient

Grayscale Bitcoin  Franklin Ethereum

Weak diversification

The 3 months correlation between Grayscale and Franklin is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and Franklin Ethereum ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Ethereum ETF and Grayscale Bitcoin 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 Bitcoin Trust are associated (or correlated) with Franklin Ethereum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Ethereum ETF has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Franklin Ethereum go up and down completely randomly.

Pair Corralation between Grayscale Bitcoin and Franklin Ethereum

Given the investment horizon of 90 days Grayscale Bitcoin Trust is expected to generate 0.59 times more return on investment than Franklin Ethereum. However, Grayscale Bitcoin Trust is 1.69 times less risky than Franklin Ethereum. It trades about 0.04 of its potential returns per unit of risk. Franklin Ethereum ETF is currently generating about -0.02 per unit of risk. If you would invest  7,358  in Grayscale Bitcoin Trust on November 19, 2024 and sell it today you would earn a total of  343.00  from holding Grayscale Bitcoin Trust or generate 4.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Grayscale Bitcoin Trust  vs.  Franklin Ethereum ETF

Grayscale Bitcoin Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Bitcoin Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Grayscale Bitcoin may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Franklin Ethereum ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin Ethereum ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Franklin Ethereum is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Grayscale Bitcoin and Franklin Ethereum

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

The idea behind Grayscale Bitcoin Trust and Franklin 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 Anywhere module to track or share privately all of your investments from the convenience of any device.