Correlation Between BetaPro Inverse and Bitcoin ETF

Can any of the company-specific risk be diversified away by investing in both BetaPro Inverse and Bitcoin ETF 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 BetaPro Inverse and Bitcoin ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BetaPro Inverse Bitcoin and Bitcoin ETF CAD, you can compare the effects of market volatilities on BetaPro Inverse and Bitcoin ETF 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 BetaPro Inverse with a short position of Bitcoin ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro Inverse and Bitcoin ETF.

Diversification Opportunities for BetaPro Inverse and Bitcoin ETF

-0.99

Correlation Coefficient

BetaPro Inverse  Bitcoin ETF

Pay attention - limited upside

The 3 months correlation between BetaPro and Bitcoin is -0.99. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro Inverse Bitcoin and Bitcoin ETF CAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin ETF CAD and BetaPro Inverse 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 BetaPro Inverse Bitcoin are associated (or correlated) with Bitcoin ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin ETF CAD has no effect on the direction of BetaPro Inverse i.e., BetaPro Inverse and Bitcoin ETF go up and down completely randomly.

Pair Corralation between BetaPro Inverse and Bitcoin ETF

Assuming the 90 days trading horizon BetaPro Inverse Bitcoin is expected to under-perform the Bitcoin ETF. In addition to that, BetaPro Inverse is 1.02 times more volatile than Bitcoin ETF CAD. It trades about -0.22 of its total potential returns per unit of risk. Bitcoin ETF CAD is currently generating about 0.27 per unit of volatility. If you would invest  2,839  in Bitcoin ETF CAD on September 12, 2024 and sell it today you would earn a total of  2,043  from holding Bitcoin ETF CAD or generate 71.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

BetaPro Inverse Bitcoin  vs.  Bitcoin ETF CAD

BetaPro Inverse Bitcoin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BetaPro Inverse Bitcoin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Bitcoin ETF CAD

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin ETF CAD are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Bitcoin ETF displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BetaPro Inverse and Bitcoin ETF

The main advantage of trading using opposite BetaPro Inverse and Bitcoin ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro Inverse position performs unexpectedly, Bitcoin ETF 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 Bitcoin ETF will offset losses from the drop in Bitcoin ETF's long position.

The idea behind BetaPro Inverse Bitcoin and Bitcoin ETF CAD pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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.