Correlation Between Grayscale Livepeer and Grayscale Zcash

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

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

Diversification Opportunities for Grayscale Livepeer and Grayscale Zcash

0.94

Correlation Coefficient

Grayscale Livepeer  Grayscale Zcash

Almost no diversification

The 3 months correlation between Grayscale and Grayscale is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Livepeer Trust and Grayscale Zcash Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Zcash Trust and Grayscale Livepeer 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 Livepeer Trust are associated (or correlated) with Grayscale Zcash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grayscale Zcash Trust has no effect on the direction of Grayscale Livepeer i.e., Grayscale Livepeer and Grayscale Zcash go up and down completely randomly.

Pair Corralation between Grayscale Livepeer and Grayscale Zcash

Given the investment horizon of 90 days Grayscale Livepeer Trust is expected to generate 1.36 times more return on investment than Grayscale Zcash. However, Grayscale Livepeer is 1.36 times more volatile than Grayscale Zcash Trust. It trades about -0.12 of its potential returns per unit of risk. Grayscale Zcash Trust is currently generating about -0.18 per unit of risk. If you would invest  1,416  in Grayscale Livepeer Trust on December 22, 2024 and sell it today you would lose (781.00) from holding Grayscale Livepeer Trust or give up 55.16% of portfolio value over 90 days.

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

Grayscale Livepeer Trust  vs.  Grayscale Zcash Trust

Grayscale Livepeer Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grayscale Livepeer Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward 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 venture sophisticated investors.

Grayscale Zcash Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grayscale Zcash Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Grayscale Livepeer and Grayscale Zcash

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

The idea behind Grayscale Livepeer Trust and Grayscale Zcash 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.