Correlation Between Grayscale Ethereum and Tidal Trust

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

Diversification Opportunities for Grayscale Ethereum and Tidal Trust

0.81

Correlation Coefficient

Grayscale Ethereum  Tidal Trust

Very poor diversification

The 3 months correlation between Grayscale and Tidal is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Ethereum Mini and Tidal Trust II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Trust II 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 Tidal Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal Trust II has no effect on the direction of Grayscale Ethereum i.e., Grayscale Ethereum and Tidal Trust go up and down completely randomly.

Pair Corralation between Grayscale Ethereum and Tidal Trust

Considering the 90-day investment horizon Grayscale Ethereum Mini is expected to generate 5.95 times more return on investment than Tidal Trust. However, Grayscale Ethereum is 5.95 times more volatile than Tidal Trust II. It trades about 0.16 of its potential returns per unit of risk. Tidal Trust II is currently generating about 0.09 per unit of risk. If you would invest  2,300  in Grayscale Ethereum Mini on September 3, 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 Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Grayscale Ethereum Mini  vs.  Tidal Trust II

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 unsteady basic indicators, Grayscale Ethereum demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Tidal Trust II

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust II are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Tidal Trust is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Grayscale Ethereum and Tidal Trust

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

The idea behind Grayscale Ethereum Mini and Tidal Trust II 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.