Correlation Between Grayscale Ethereum and SEMPRA

Can any of the company-specific risk be diversified away by investing in both Grayscale Ethereum and SEMPRA 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 SEMPRA 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 SEMPRA ENERGY 6, you can compare the effects of market volatilities on Grayscale Ethereum and SEMPRA 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 SEMPRA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Ethereum and SEMPRA.

Diversification Opportunities for Grayscale Ethereum and SEMPRA

-0.43

Correlation Coefficient

Grayscale Ethereum  SEMPRA

Very good diversification

The 3 months correlation between Grayscale and SEMPRA is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Ethereum Mini and SEMPRA ENERGY 6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEMPRA ENERGY 6 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 SEMPRA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEMPRA ENERGY 6 has no effect on the direction of Grayscale Ethereum i.e., Grayscale Ethereum and SEMPRA go up and down completely randomly.

Pair Corralation between Grayscale Ethereum and SEMPRA

Considering the 90-day investment horizon Grayscale Ethereum Mini is expected to generate 7.51 times more return on investment than SEMPRA. However, Grayscale Ethereum is 7.51 times more volatile than SEMPRA ENERGY 6. It trades about 0.28 of its potential returns per unit of risk. SEMPRA ENERGY 6 is currently generating about 0.24 per unit of risk. If you would invest  2,500  in Grayscale Ethereum Mini on August 31, 2024 and sell it today you would earn a total of  928.00  from holding Grayscale Ethereum Mini or generate 37.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	81.82%
Values	Daily Returns

Grayscale Ethereum Mini  vs.  SEMPRA ENERGY 6

Grayscale Ethereum Mini

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Ethereum Mini are ranked lower than 13 (%) 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.

SEMPRA ENERGY 6

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SEMPRA ENERGY 6 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SEMPRA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grayscale Ethereum and SEMPRA

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

The idea behind Grayscale Ethereum Mini and SEMPRA ENERGY 6 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.