Correlation Between Riot Blockchain and Grayscale Ethereum

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

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

Diversification Opportunities for Riot Blockchain and Grayscale Ethereum

0.79

Correlation Coefficient

Riot Blockchain  Grayscale Ethereum

Poor diversification

The 3 months correlation between Riot and Grayscale is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Riot Blockchain and Grayscale Ethereum Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Ethereum Trust and Riot Blockchain 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 Riot Blockchain are associated (or correlated) with Grayscale Ethereum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grayscale Ethereum Trust has no effect on the direction of Riot Blockchain i.e., Riot Blockchain and Grayscale Ethereum go up and down completely randomly.

Pair Corralation between Riot Blockchain and Grayscale Ethereum

Given the investment horizon of 90 days Riot Blockchain is expected to generate 1.33 times more return on investment than Grayscale Ethereum. However, Riot Blockchain is 1.33 times more volatile than Grayscale Ethereum Trust. It trades about 0.04 of its potential returns per unit of risk. Grayscale Ethereum Trust is currently generating about 0.02 per unit of risk. If you would invest  940.00  in Riot Blockchain on October 4, 2024 and sell it today you would earn a total of  88.00  from holding Riot Blockchain or generate 9.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.21%
Values	Daily Returns

Riot Blockchain  vs.  Grayscale Ethereum Trust

Riot Blockchain

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Riot Blockchain are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Riot Blockchain unveiled solid returns over the last few months and may actually be approaching a breakup point.

Grayscale Ethereum Trust

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Ethereum Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Grayscale Ethereum exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Riot Blockchain and Grayscale Ethereum

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

The idea behind Riot Blockchain and Grayscale 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.

Check out your portfolio center.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.