Correlation Between Grayscale Ethereum and SPDR ICE

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

Diversification Opportunities for Grayscale Ethereum and SPDR ICE

-0.46

Correlation Coefficient

Grayscale Ethereum  SPDR ICE

Very good diversification

The 3 months correlation between Grayscale and SPDR is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Ethereum Mini and SPDR ICE Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR ICE Preferred 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 SPDR ICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR ICE Preferred has no effect on the direction of Grayscale Ethereum i.e., Grayscale Ethereum and SPDR ICE go up and down completely randomly.

Pair Corralation between Grayscale Ethereum and SPDR ICE

Considering the 90-day investment horizon Grayscale Ethereum Mini is expected to generate 8.23 times more return on investment than SPDR ICE. However, Grayscale Ethereum is 8.23 times more volatile than SPDR ICE Preferred. It trades about 0.16 of its potential returns per unit of risk. SPDR ICE Preferred is currently generating about 0.04 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 Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Grayscale Ethereum Mini  vs.  SPDR ICE Preferred

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.

SPDR ICE Preferred

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR ICE Preferred are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, SPDR ICE 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 SPDR ICE

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

The idea behind Grayscale Ethereum Mini and SPDR ICE Preferred 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.