Correlation Between Valkyrie Bitcoin and VanEck Digital

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

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

Diversification Opportunities for Valkyrie Bitcoin and VanEck Digital

0.95

Correlation Coefficient

Valkyrie Bitcoin  VanEck Digital

Almost no diversification

The 3 months correlation between Valkyrie and VanEck is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Valkyrie Bitcoin Strategy and VanEck Digital Transformation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Digital Trans and Valkyrie 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 Valkyrie Bitcoin Strategy are associated (or correlated) with VanEck Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Digital Trans has no effect on the direction of Valkyrie Bitcoin i.e., Valkyrie Bitcoin and VanEck Digital go up and down completely randomly.

Pair Corralation between Valkyrie Bitcoin and VanEck Digital

Considering the 90-day investment horizon Valkyrie Bitcoin Strategy is expected to generate 0.76 times more return on investment than VanEck Digital. However, Valkyrie Bitcoin Strategy is 1.31 times less risky than VanEck Digital. It trades about -0.16 of its potential returns per unit of risk. VanEck Digital Transformation is currently generating about -0.14 per unit of risk. If you would invest  1,477  in Valkyrie Bitcoin Strategy on December 29, 2024 and sell it today you would lose (468.00) from holding Valkyrie Bitcoin Strategy or give up 31.69% of portfolio value over 90 days.

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

Valkyrie Bitcoin Strategy  vs.  VanEck Digital Transformation

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 April 2025. The current disturbance may also be a sign of long-run up-swing for the Exchange Traded Fund stockholders.

VanEck Digital Trans

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck Digital Transformation has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Etf's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.

Pair Trading with Valkyrie Bitcoin and VanEck Digital

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

The idea behind Valkyrie Bitcoin Strategy and VanEck Digital Transformation 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.