Correlation Between ProShares Bitcoin and Invesco Alerian

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

By analyzing existing cross correlation between ProShares Bitcoin Strategy and Invesco Alerian Galaxy, you can compare the effects of market volatilities on ProShares Bitcoin and Invesco Alerian 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 ProShares Bitcoin with a short position of Invesco Alerian. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Bitcoin and Invesco Alerian.

Diversification Opportunities for ProShares Bitcoin and Invesco Alerian

0.95

Correlation Coefficient

ProShares Bitcoin  Invesco Alerian

Almost no diversification

The 3 months correlation between ProShares and Invesco is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Bitcoin Strategy and Invesco Alerian Galaxy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Alerian Galaxy and ProShares Bitcoin 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 ProShares Bitcoin Strategy are associated (or correlated) with Invesco Alerian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Alerian Galaxy has no effect on the direction of ProShares Bitcoin i.e., ProShares Bitcoin and Invesco Alerian go up and down completely randomly.

Pair Corralation between ProShares Bitcoin and Invesco Alerian

Given the investment horizon of 90 days ProShares Bitcoin Strategy is expected to generate 1.2 times more return on investment than Invesco Alerian. However, ProShares Bitcoin is 1.2 times more volatile than Invesco Alerian Galaxy. It trades about -0.06 of its potential returns per unit of risk. Invesco Alerian Galaxy is currently generating about -0.08 per unit of risk. If you would invest  2,130  in ProShares Bitcoin Strategy on December 30, 2024 and sell it today you would lose (264.00) from holding ProShares Bitcoin Strategy or give up 12.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

ProShares Bitcoin Strategy  vs.  Invesco Alerian Galaxy

ProShares Bitcoin

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Bitcoin Strategy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Invesco Alerian Galaxy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Alerian Galaxy 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 forward-looking signals remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with ProShares Bitcoin and Invesco Alerian

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

The idea behind ProShares Bitcoin Strategy and Invesco Alerian Galaxy 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.