Correlation Between Grayscale Zcash and Grayscale Bitcoin

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

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

Diversification Opportunities for Grayscale Zcash and Grayscale Bitcoin

0.21

Correlation Coefficient

Grayscale Zcash  Grayscale Bitcoin

Modest diversification

The 3 months correlation between Grayscale and Grayscale is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Zcash Trust and Grayscale Bitcoin Cash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Bitcoin Cash and Grayscale Zcash 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 Zcash Trust are associated (or correlated) with Grayscale Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grayscale Bitcoin Cash has no effect on the direction of Grayscale Zcash i.e., Grayscale Zcash and Grayscale Bitcoin go up and down completely randomly.

Pair Corralation between Grayscale Zcash and Grayscale Bitcoin

Given the investment horizon of 90 days Grayscale Zcash Trust is expected to generate 1.24 times more return on investment than Grayscale Bitcoin. However, Grayscale Zcash is 1.24 times more volatile than Grayscale Bitcoin Cash. It trades about 0.11 of its potential returns per unit of risk. Grayscale Bitcoin Cash is currently generating about 0.02 per unit of risk. If you would invest  392.00  in Grayscale Zcash Trust on October 1, 2024 and sell it today you would earn a total of  201.00  from holding Grayscale Zcash Trust or generate 51.28% return on investment over 90 days.

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

Grayscale Zcash Trust  vs.  Grayscale Bitcoin Cash

Grayscale Zcash Trust

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Zcash Trust are ranked lower than 8 (%) 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.

Grayscale Bitcoin Cash

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Bitcoin Cash are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Grayscale Bitcoin may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Grayscale Zcash and Grayscale Bitcoin

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

The idea behind Grayscale Zcash Trust and Grayscale Bitcoin Cash 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.