Correlation Between ProShares Bitcoin and VanEck Rare

Can any of the company-specific risk be diversified away by investing in both ProShares Bitcoin and VanEck Rare 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 VanEck Rare 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 VanEck Rare EarthStrategic, you can compare the effects of market volatilities on ProShares Bitcoin and VanEck Rare 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 VanEck Rare. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Bitcoin and VanEck Rare.

Diversification Opportunities for ProShares Bitcoin and VanEck Rare

-0.69

Correlation Coefficient

ProShares Bitcoin  VanEck Rare

Excellent diversification

The 3 months correlation between ProShares and VanEck is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Bitcoin Strategy and VanEck Rare EarthStrategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Rare EarthStr 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 VanEck Rare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Rare EarthStr has no effect on the direction of ProShares Bitcoin i.e., ProShares Bitcoin and VanEck Rare go up and down completely randomly.

Pair Corralation between ProShares Bitcoin and VanEck Rare

Given the investment horizon of 90 days ProShares Bitcoin Strategy is expected to under-perform the VanEck Rare. In addition to that, ProShares Bitcoin is 2.45 times more volatile than VanEck Rare EarthStrategic. It trades about -0.11 of its total potential returns per unit of risk. VanEck Rare EarthStrategic is currently generating about -0.16 per unit of volatility. If you would invest  4,281  in VanEck Rare EarthStrategic on October 12, 2024 and sell it today you would lose (199.00) from holding VanEck Rare EarthStrategic or give up 4.65% of portfolio value over 90 days.

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

ProShares Bitcoin Strategy  vs.  VanEck Rare EarthStrategic

ProShares Bitcoin

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Bitcoin Strategy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, ProShares Bitcoin displayed solid returns over the last few months and may actually be approaching a breakup point.

VanEck Rare EarthStr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Rare EarthStrategic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with ProShares Bitcoin and VanEck Rare

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

The idea behind ProShares Bitcoin Strategy and VanEck Rare EarthStrategic 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.