Correlation Between 2x Long and SPKY
Can any of the company-specific risk be diversified away by investing in both 2x Long and SPKY 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 2x Long and SPKY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 2x Long VIX and SPKY, you can compare the effects of market volatilities on 2x Long and SPKY 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 2x Long with a short position of SPKY. Check out your portfolio center. Please also check ongoing floating volatility patterns of 2x Long and SPKY.
Diversification Opportunities for 2x Long and SPKY
Poor diversification
The 3 months correlation between UVIX and SPKY is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding 2x Long VIX and SPKY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPKY and 2x Long 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 2x Long VIX are associated (or correlated) with SPKY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPKY has no effect on the direction of 2x Long i.e., 2x Long and SPKY go up and down completely randomly.
Pair Corralation between 2x Long and SPKY
If you would invest 492.00 in SPKY on November 2, 2024 and sell it today you would earn a total of 0.00 from holding SPKY or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.96% |
| Values | Daily Returns |
2x Long VIX vs. SPKY
Performance |
| Timeline |
| 2x Long VIX |
| SPKY |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
2x Long and SPKY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 2x Long and SPKY
The main advantage of trading using opposite 2x Long and SPKY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 2x Long position performs unexpectedly, SPKY 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 SPKY will offset losses from the drop in SPKY's long position.| 2x Long vs. 1x Short VIX | 2x Long vs. ProShares UltraShort Bloomberg | 2x Long vs. MicroSectors FANG Index | 2x Long vs. AXS TSLA Bear |
| SPKY vs. Invesco DB Dollar | SPKY vs. iPath Series B | SPKY vs. ProShares VIX Short Term | SPKY vs. ProShares VIX Mid Term |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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