Correlation Between Grayscale Ethereum and VanEck Oil

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

Diversification Opportunities for Grayscale Ethereum and VanEck Oil

-0.64

Correlation Coefficient

Grayscale Ethereum  VanEck Oil

Excellent diversification

The 3 months correlation between Grayscale and VanEck is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Ethereum Mini and VanEck Oil Refiners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Oil Refiners 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 VanEck Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Oil Refiners has no effect on the direction of Grayscale Ethereum i.e., Grayscale Ethereum and VanEck Oil go up and down completely randomly.

Pair Corralation between Grayscale Ethereum and VanEck Oil

Considering the 90-day investment horizon Grayscale Ethereum Mini is expected to generate 4.81 times more return on investment than VanEck Oil. However, Grayscale Ethereum is 4.81 times more volatile than VanEck Oil Refiners. It trades about 0.16 of its potential returns per unit of risk. VanEck Oil Refiners is currently generating about -0.18 per unit of risk. If you would invest  2,300  in Grayscale Ethereum Mini on September 2, 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 Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Grayscale Ethereum Mini  vs.  VanEck Oil Refiners

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 inconsistent basic indicators, Grayscale Ethereum demonstrated solid returns over the last few months and may actually be approaching a breakup point.

VanEck Oil Refiners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Oil Refiners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest sluggish performance, the Etf's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Pair Trading with Grayscale Ethereum and VanEck Oil

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

The idea behind Grayscale Ethereum Mini and VanEck Oil Refiners 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.