Correlation Between Grayscale Ethereum and PEMEX

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

Diversification Opportunities for Grayscale Ethereum and PEMEX

0.26

Correlation Coefficient

Grayscale Ethereum  PEMEX

Modest diversification

The 3 months correlation between Grayscale and PEMEX is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Ethereum Mini and PEMEX PROJ FDG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEMEX PROJ FDG 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 PEMEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PEMEX PROJ FDG has no effect on the direction of Grayscale Ethereum i.e., Grayscale Ethereum and PEMEX go up and down completely randomly.

Pair Corralation between Grayscale Ethereum and PEMEX

Considering the 90-day investment horizon Grayscale Ethereum Mini is expected to generate 2.03 times more return on investment than PEMEX. However, Grayscale Ethereum is 2.03 times more volatile than PEMEX PROJ FDG. It trades about 0.16 of its potential returns per unit of risk. PEMEX PROJ FDG is currently generating about 0.01 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	Very Weak
Accuracy	96.88%
Values	Daily Returns

Grayscale Ethereum Mini  vs.  PEMEX PROJ FDG

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.

PEMEX PROJ FDG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PEMEX PROJ FDG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PEMEX is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grayscale Ethereum and PEMEX

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

The idea behind Grayscale Ethereum Mini and PEMEX PROJ FDG 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.