Correlation Between Grayscale Filecoin and Grayscale Zcash

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

Diversification Opportunities for Grayscale Filecoin and Grayscale Zcash

0.78

Correlation Coefficient

Grayscale Filecoin  Grayscale Zcash

Poor diversification

The 3 months correlation between Grayscale and Grayscale is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Filecoin Trust and Grayscale Zcash Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Zcash 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 Grayscale Zcash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grayscale Zcash Trust has no effect on the direction of Grayscale Filecoin i.e., Grayscale Filecoin and Grayscale Zcash go up and down completely randomly.

Pair Corralation between Grayscale Filecoin and Grayscale Zcash

Given the investment horizon of 90 days Grayscale Filecoin Trust is expected to generate 1.13 times more return on investment than Grayscale Zcash. However, Grayscale Filecoin is 1.13 times more volatile than Grayscale Zcash Trust. It trades about 0.18 of its potential returns per unit of risk. Grayscale Zcash Trust is currently generating about 0.15 per unit of risk. If you would invest  5,400  in Grayscale Filecoin Trust on September 22, 2024 and sell it today you would earn a total of  2,100  from holding Grayscale Filecoin Trust or generate 38.89% 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.  Grayscale Zcash 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 unfluctuating essential indicators, Grayscale Filecoin reported solid returns over the last few months and may actually be approaching a breakup point.

Grayscale Zcash Trust

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Zcash Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Grayscale Zcash demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grayscale Filecoin and Grayscale Zcash

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

The idea behind Grayscale Filecoin Trust and Grayscale Zcash 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.