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 Retail, 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
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Volatility and SPDR is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Volatility Shares Trust and SPDR SP Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Retail 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 Retail 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 5.39 times more return on investment than SPDR SP. However, Volatility Shares is 5.39 times more volatile than SPDR SP Retail. It trades about 0.08 of its potential returns per unit of risk. SPDR SP Retail is currently generating about 0.04 per unit of risk. If you would invest 4,013 in Volatility Shares Trust on August 30, 2024 and sell it today you would earn a total of 1,951 from holding Volatility Shares Trust or generate 48.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volatility Shares Trust vs. SPDR SP Retail
Performance |
| Timeline |
| Volatility Shares Trust |
| SPDR SP Retail |
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. 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 Stocks Directory module to find actively traded stocks across global markets.
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