Correlation Between ProShares Bitcoin and Simplify Equity
Can any of the company-specific risk be diversified away by investing in both ProShares Bitcoin and Simplify Equity 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 Simplify Equity 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 Simplify Equity PLUS, you can compare the effects of market volatilities on ProShares Bitcoin and Simplify Equity 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 Simplify Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Bitcoin and Simplify Equity.
Diversification Opportunities for ProShares Bitcoin and Simplify Equity
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and Simplify is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Bitcoin Strategy and Simplify Equity PLUS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Equity PLUS 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 Simplify Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Equity PLUS has no effect on the direction of ProShares Bitcoin i.e., ProShares Bitcoin and Simplify Equity go up and down completely randomly.
Pair Corralation between ProShares Bitcoin and Simplify Equity
Given the investment horizon of 90 days ProShares Bitcoin Strategy is expected to generate 3.44 times more return on investment than Simplify Equity. However, ProShares Bitcoin is 3.44 times more volatile than Simplify Equity PLUS. It trades about 0.09 of its potential returns per unit of risk. Simplify Equity PLUS is currently generating about 0.14 per unit of risk. If you would invest 627.00 in ProShares Bitcoin Strategy on November 19, 2024 and sell it today you would earn a total of 1,635 from holding ProShares Bitcoin Strategy or generate 260.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Bitcoin Strategy vs. Simplify Equity PLUS
Performance |
| Timeline |
| ProShares Bitcoin |
| Simplify Equity PLUS |
ProShares Bitcoin and Simplify Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Bitcoin and Simplify Equity
The main advantage of trading using opposite ProShares Bitcoin and Simplify Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Bitcoin position performs unexpectedly, Simplify Equity 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 Simplify Equity will offset losses from the drop in Simplify Equity's long position.| ProShares Bitcoin vs. Grayscale Bitcoin Trust | ProShares Bitcoin vs. Grayscale Ethereum Trust | ProShares Bitcoin vs. Coinbase Global | ProShares Bitcoin vs. Valkyrie Bitcoin Strategy |
| Simplify Equity vs. First Trust SkyBridge | Simplify Equity vs. VanEck Digital Transformation | Simplify Equity vs. Global X Blockchain | Simplify Equity vs. Bitcoin Strategy Profund |
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.
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