Correlation Between Volatility Shares and Regents Park
Can any of the company-specific risk be diversified away by investing in both Volatility Shares and Regents Park 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 Volatility Shares and Regents Park into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volatility Shares Trust and Regents Park Funds, you can compare the effects of market volatilities on Volatility Shares and Regents Park 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 Volatility Shares with a short position of Regents Park. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volatility Shares and Regents Park.
Diversification Opportunities for Volatility Shares and Regents Park
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Volatility and Regents is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Volatility Shares Trust and Regents Park Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regents Park Funds and Volatility Shares 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 Volatility Shares Trust are associated (or correlated) with Regents Park. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regents Park Funds has no effect on the direction of Volatility Shares i.e., Volatility Shares and Regents Park go up and down completely randomly.
Pair Corralation between Volatility Shares and Regents Park
Given the investment horizon of 90 days Volatility Shares Trust is expected to generate 7.84 times more return on investment than Regents Park. However, Volatility Shares is 7.84 times more volatile than Regents Park Funds. It trades about 0.1 of its potential returns per unit of risk. Regents Park Funds is currently generating about 0.02 per unit of risk. If you would invest 1,346 in Volatility Shares Trust on September 1, 2024 and sell it today you would earn a total of 4,674 from holding Volatility Shares Trust or generate 347.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 31.3% |
| Values | Daily Returns |
Volatility Shares Trust vs. Regents Park Funds
Performance |
| Timeline |
| Volatility Shares Trust |
| Regents Park Funds |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Volatility Shares and Regents Park Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volatility Shares and Regents Park
The main advantage of trading using opposite Volatility Shares and Regents Park positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volatility Shares position performs unexpectedly, Regents Park 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 Regents Park will offset losses from the drop in Regents Park's long position.| Volatility Shares vs. ProShares Trust | Volatility Shares vs. iShares Ethereum Trust | Volatility Shares vs. ProShares Trust | Volatility Shares vs. Grayscale Ethereum 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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