Correlation Between Grayscale Ethereum and BondBloxx ETF

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

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

Diversification Opportunities for Grayscale Ethereum and BondBloxx ETF

-0.44

Correlation Coefficient

Grayscale Ethereum  BondBloxx ETF

Very good diversification

The 3 months correlation between Grayscale and BondBloxx is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Ethereum Mini and BondBloxx ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BondBloxx ETF Trust 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 Mini are associated (or correlated) with BondBloxx ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BondBloxx ETF Trust has no effect on the direction of Grayscale Ethereum i.e., Grayscale Ethereum and BondBloxx ETF go up and down completely randomly.

Pair Corralation between Grayscale Ethereum and BondBloxx ETF

Considering the 90-day investment horizon Grayscale Ethereum Mini is expected to generate 6.75 times more return on investment than BondBloxx ETF. However, Grayscale Ethereum is 6.75 times more volatile than BondBloxx ETF Trust. It trades about 0.16 of its potential returns per unit of risk. BondBloxx ETF Trust is currently generating about 0.02 per unit of risk. If you would invest  2,300  in Grayscale Ethereum Mini on September 2, 2024 and sell it today you would earn a total of  1,084  from holding Grayscale Ethereum Mini or generate 47.13% return on investment over 90 days.

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

Grayscale Ethereum Mini  vs.  BondBloxx ETF Trust

Grayscale Ethereum Mini

Risk-Adjusted Performance

12 of 100

Good

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

BondBloxx ETF Trust

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BondBloxx ETF Trust are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, BondBloxx ETF is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Grayscale Ethereum and BondBloxx ETF

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

The idea behind Grayscale Ethereum Mini and BondBloxx ETF 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.