Correlation Between Grayscale Ethereum and Global X

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

Diversification Opportunities for Grayscale Ethereum and Global X

0.57

Correlation Coefficient

Grayscale Ethereum  Global X

Very weak diversification

The 3 months correlation between Grayscale and Global is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Ethereum Trust and Global X Blockchain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Blockchain 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Blockchain has no effect on the direction of Grayscale Ethereum i.e., Grayscale Ethereum and Global X go up and down completely randomly.

Pair Corralation between Grayscale Ethereum and Global X

Given the investment horizon of 90 days Grayscale Ethereum Trust is expected to generate 1.66 times more return on investment than Global X. However, Grayscale Ethereum is 1.66 times more volatile than Global X Blockchain. It trades about 0.42 of its potential returns per unit of risk. Global X Blockchain is currently generating about 0.27 per unit of risk. If you would invest  2,080  in Grayscale Ethereum Trust on March 11, 2024 and sell it today you would earn a total of  1,357  from holding Grayscale Ethereum Trust or generate 65.24% return on investment over 90 days.

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

Grayscale Ethereum Trust  vs.  Global X Blockchain

Grayscale Ethereum Trust

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Ethereum Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical indicators, Grayscale Ethereum may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Global X Blockchain

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Blockchain are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Grayscale Ethereum and Global X

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

The idea behind Grayscale Ethereum Trust and Global X Blockchain 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.