Correlation Between IPath Series and T Rex
Can any of the company-specific risk be diversified away by investing in both IPath Series and T Rex 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 IPath Series and T Rex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iPath Series B and T Rex 2X Inverse, you can compare the effects of market volatilities on IPath Series and T Rex 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 IPath Series with a short position of T Rex. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPath Series and T Rex.
Diversification Opportunities for IPath Series and T Rex
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IPath and ETQ is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding iPath Series B and T Rex 2X Inverse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rex 2X and IPath Series 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 iPath Series B are associated (or correlated) with T Rex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rex 2X has no effect on the direction of IPath Series i.e., IPath Series and T Rex go up and down completely randomly.
Pair Corralation between IPath Series and T Rex
Considering the 90-day investment horizon iPath Series B is expected to generate 0.45 times more return on investment than T Rex. However, iPath Series B is 2.23 times less risky than T Rex. It trades about -0.05 of its potential returns per unit of risk. T Rex 2X Inverse is currently generating about -0.11 per unit of risk. If you would invest 18,112 in iPath Series B on October 25, 2024 and sell it today you would lose (13,837) from holding iPath Series B or give up 76.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 12.17% |
| Values | Daily Returns |
iPath Series B vs. T Rex 2X Inverse
Performance |
| Timeline |
| iPath Series B |
| T Rex 2X |
IPath Series and T Rex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPath Series and T Rex
The main advantage of trading using opposite IPath Series and T Rex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPath Series position performs unexpectedly, T Rex 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 T Rex will offset losses from the drop in T Rex's long position.| IPath Series vs. ProShares Ultra VIX | IPath Series vs. ProShares Short VIX | IPath Series vs. ProShares UltraPro Short | IPath Series vs. iShares 20 Year |
| T Rex vs. ProShares Trust | T Rex vs. iShares Ethereum Trust | T Rex vs. ProShares Trust | T Rex vs. Grayscale Ethereum Trust |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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