Correlation Between ProShares Bitcoin and First Trust
Can any of the company-specific risk be diversified away by investing in both ProShares Bitcoin and First Trust 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 ProShares Bitcoin and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Bitcoin Strategy and First Trust Brazil, you can compare the effects of market volatilities on ProShares Bitcoin and First Trust 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 ProShares Bitcoin with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Bitcoin and First Trust.
Diversification Opportunities for ProShares Bitcoin and First Trust
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ProShares and First is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Bitcoin Strategy and First Trust Brazil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Brazil and ProShares Bitcoin 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 ProShares Bitcoin Strategy are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Brazil has no effect on the direction of ProShares Bitcoin i.e., ProShares Bitcoin and First Trust go up and down completely randomly.
Pair Corralation between ProShares Bitcoin and First Trust
Given the investment horizon of 90 days ProShares Bitcoin Strategy is expected to under-perform the First Trust. In addition to that, ProShares Bitcoin is 1.5 times more volatile than First Trust Brazil. It trades about -0.19 of its total potential returns per unit of risk. First Trust Brazil is currently generating about -0.01 per unit of volatility. If you would invest 992.00 in First Trust Brazil on December 8, 2024 and sell it today you would lose (6.00) from holding First Trust Brazil or give up 0.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Bitcoin Strategy vs. First Trust Brazil
Performance |
| Timeline |
| ProShares Bitcoin |
| First Trust Brazil |
ProShares Bitcoin and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Bitcoin and First Trust
The main advantage of trading using opposite ProShares Bitcoin and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Bitcoin position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| ProShares Bitcoin vs. Grayscale Bitcoin Trust | ||
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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