Correlation Between ProShares Bitcoin and Health Care

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

Diversification Opportunities for ProShares Bitcoin and Health Care

-0.8

Correlation Coefficient

ProShares Bitcoin  Health Care

Pay attention - limited upside

The 3 months correlation between ProShares and Health is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Bitcoin Strategy and Health Care Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Care Select 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 Health Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Care Select has no effect on the direction of ProShares Bitcoin i.e., ProShares Bitcoin and Health Care go up and down completely randomly.

Pair Corralation between ProShares Bitcoin and Health Care

Given the investment horizon of 90 days ProShares Bitcoin Strategy is expected to generate 4.9 times more return on investment than Health Care. However, ProShares Bitcoin is 4.9 times more volatile than Health Care Select. It trades about 0.09 of its potential returns per unit of risk. Health Care Select is currently generating about 0.01 per unit of risk. If you would invest  634.00  in ProShares Bitcoin Strategy on October 11, 2024 and sell it today you would earn a total of  1,650  from holding ProShares Bitcoin Strategy or generate 260.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

ProShares Bitcoin Strategy  vs.  Health Care Select

Pair Trading with ProShares Bitcoin and Health Care

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

The idea behind ProShares Bitcoin Strategy and Health Care Select 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.