Correlation Between Volatility Shares and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Volatility Shares and SPDR SP 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 SPDR SP 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 SPDR SP Global, you can compare the effects of market volatilities on Volatility Shares and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volatility Shares and SPDR SP.
Diversification Opportunities for Volatility Shares and SPDR SP
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Volatility and SPDR is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Volatility Shares Trust and SPDR SP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Global 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Global has no effect on the direction of Volatility Shares i.e., Volatility Shares and SPDR SP go up and down completely randomly.
Pair Corralation between Volatility Shares and SPDR SP
Given the investment horizon of 90 days Volatility Shares Trust is expected to generate 7.39 times more return on investment than SPDR SP. However, Volatility Shares is 7.39 times more volatile than SPDR SP Global. It trades about 0.09 of its potential returns per unit of risk. SPDR SP Global is currently generating about -0.03 per unit of risk. If you would invest 3,454 in Volatility Shares Trust on September 3, 2024 and sell it today you would earn a total of 2,566 from holding Volatility Shares Trust or generate 74.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volatility Shares Trust vs. SPDR SP Global
Performance |
| Timeline |
| Volatility Shares Trust |
| SPDR SP Global |
Volatility Shares and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volatility Shares and SPDR SP
The main advantage of trading using opposite Volatility Shares and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volatility Shares position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP's long position.| Volatility Shares vs. Grayscale Bitcoin Trust | Volatility Shares vs. ProShares Bitcoin Strategy | Volatility Shares vs. Amplify Transformational Data | Volatility Shares vs. First Trust Indxx |
| SPDR SP vs. FlexShares Morningstar Global | SPDR SP vs. SPDR SP North | SPDR SP vs. abrdn Physical Precious | SPDR SP vs. SPDR SP Global |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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