Correlation Between Volatility Shares and ETF Managers

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

By analyzing existing cross correlation between Volatility Shares Trust and ETF Managers Group, you can compare the effects of market volatilities on Volatility Shares and ETF Managers 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 Volatility Shares with a short position of ETF Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volatility Shares and ETF Managers.

Diversification Opportunities for Volatility Shares and ETF Managers

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Correlation Coefficient

Volatility Shares  ETF Managers

Pay attention - limited upside

The 3 months correlation between Volatility and ETF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Volatility Shares Trust and ETF Managers Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Managers Group and Volatility Shares 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 Volatility Shares Trust are associated (or correlated) with ETF Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Managers Group has no effect on the direction of Volatility Shares i.e., Volatility Shares and ETF Managers go up and down completely randomly.

Pair Corralation between Volatility Shares and ETF Managers

If you would invest  1,331  in Volatility Shares Trust on December 4, 2024 and sell it today you would earn a total of  2,835  from holding Volatility Shares Trust or generate 213.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Volatility Shares Trust  vs.  ETF Managers Group

Volatility Shares Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Volatility Shares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

ETF Managers Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days ETF Managers Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, ETF Managers is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Volatility Shares and ETF Managers

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

The idea behind Volatility Shares Trust and ETF Managers Group 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.