Correlation Between Global X and Valkyrie Bitcoin

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

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

Diversification Opportunities for Global X and Valkyrie Bitcoin

0.82

Correlation Coefficient

Global X  Valkyrie Bitcoin

Very poor diversification

The 3 months correlation between Global and Valkyrie is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Global X Blockchain and Valkyrie Bitcoin Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valkyrie Bitcoin Strategy and Global X 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 Global X Blockchain are associated (or correlated) with Valkyrie Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valkyrie Bitcoin Strategy has no effect on the direction of Global X i.e., Global X and Valkyrie Bitcoin go up and down completely randomly.

Pair Corralation between Global X and Valkyrie Bitcoin

Given the investment horizon of 90 days Global X Blockchain is expected to under-perform the Valkyrie Bitcoin. In addition to that, Global X is 1.06 times more volatile than Valkyrie Bitcoin Strategy. It trades about -0.28 of its total potential returns per unit of risk. Valkyrie Bitcoin Strategy is currently generating about -0.26 per unit of volatility. If you would invest  1,455  in Valkyrie Bitcoin Strategy on November 28, 2024 and sell it today you would lose (249.00) from holding Valkyrie Bitcoin Strategy or give up 17.11% of portfolio value over 90 days.

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

Global X Blockchain  vs.  Valkyrie Bitcoin Strategy

Global X Blockchain

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X Blockchain has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

Valkyrie Bitcoin Strategy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Valkyrie Bitcoin Strategy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Etf's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the Exchange Traded Fund stockholders.

Pair Trading with Global X and Valkyrie Bitcoin

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

The idea behind Global X Blockchain and Valkyrie Bitcoin Strategy 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.