Correlation Between Volatility Shares and ETC 6

Can any of the company-specific risk be diversified away by investing in both Volatility Shares and ETC 6 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 ETC 6 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 ETC 6 Meridian, you can compare the effects of market volatilities on Volatility Shares and ETC 6 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 ETC 6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volatility Shares and ETC 6.

Diversification Opportunities for Volatility Shares and ETC 6

-0.65

Correlation Coefficient

Volatility Shares  ETC 6

Excellent diversification

The 3 months correlation between Volatility and ETC is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Volatility Shares Trust and ETC 6 Meridian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETC 6 Meridian 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 ETC 6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETC 6 Meridian has no effect on the direction of Volatility Shares i.e., Volatility Shares and ETC 6 go up and down completely randomly.

Pair Corralation between Volatility Shares and ETC 6

Given the investment horizon of 90 days Volatility Shares Trust is expected to under-perform the ETC 6. In addition to that, Volatility Shares is 9.04 times more volatile than ETC 6 Meridian. It trades about -0.07 of its total potential returns per unit of risk. ETC 6 Meridian is currently generating about 0.16 per unit of volatility. If you would invest  3,643  in ETC 6 Meridian on December 29, 2024 and sell it today you would earn a total of  243.00  from holding ETC 6 Meridian or generate 6.67% return on investment over 90 days.

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

Volatility Shares Trust  vs.  ETC 6 Meridian

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.

ETC 6 Meridian

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ETC 6 Meridian are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, ETC 6 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Volatility Shares and ETC 6

The main advantage of trading using opposite Volatility Shares and ETC 6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volatility Shares position performs unexpectedly, ETC 6 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 ETC 6 will offset losses from the drop in ETC 6's long position.

The idea behind Volatility Shares Trust and ETC 6 Meridian 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.