Correlation Between Grayscale Filecoin and Zencash Investment

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

By analyzing existing cross correlation between Grayscale Filecoin Trust and Zencash Investment Trust, you can compare the effects of market volatilities on Grayscale Filecoin and Zencash Investment 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 Filecoin with a short position of Zencash Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Filecoin and Zencash Investment.

Diversification Opportunities for Grayscale Filecoin and Zencash Investment

0.74

Correlation Coefficient

Grayscale Filecoin  Zencash Investment

Poor diversification

The 3 months correlation between Grayscale and Zencash is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Filecoin Trust and Zencash Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zencash Investment Trust and Grayscale Filecoin 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 Filecoin Trust are associated (or correlated) with Zencash Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zencash Investment Trust has no effect on the direction of Grayscale Filecoin i.e., Grayscale Filecoin and Zencash Investment go up and down completely randomly.

Pair Corralation between Grayscale Filecoin and Zencash Investment

Given the investment horizon of 90 days Grayscale Filecoin Trust is expected to generate 1.73 times more return on investment than Zencash Investment. However, Grayscale Filecoin is 1.73 times more volatile than Zencash Investment Trust. It trades about 0.11 of its potential returns per unit of risk. Zencash Investment Trust is currently generating about 0.1 per unit of risk. If you would invest  5,200  in Grayscale Filecoin Trust on September 20, 2024 and sell it today you would earn a total of  2,300  from holding Grayscale Filecoin Trust or generate 44.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Grayscale Filecoin Trust  vs.  Zencash Investment Trust

Grayscale Filecoin Trust

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Filecoin Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting essential indicators, Grayscale Filecoin reported solid returns over the last few months and may actually be approaching a breakup point.

Zencash Investment Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zencash Investment Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Zencash Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grayscale Filecoin and Zencash Investment

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

The idea behind Grayscale Filecoin Trust and Zencash Investment 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.