Correlation Between Valkyrie Bitcoin and ProShares Trust

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

By analyzing existing cross correlation between Valkyrie Bitcoin Futures and ProShares Trust, you can compare the effects of market volatilities on Valkyrie Bitcoin and ProShares Trust 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 ProShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valkyrie Bitcoin and ProShares Trust.

Diversification Opportunities for Valkyrie Bitcoin and ProShares Trust

0.95

Correlation Coefficient

Valkyrie Bitcoin  ProShares Trust

Almost no diversification

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

Pair Corralation between Valkyrie Bitcoin and ProShares Trust

Given the investment horizon of 90 days Valkyrie Bitcoin Futures is expected to generate 1.32 times more return on investment than ProShares Trust. However, Valkyrie Bitcoin is 1.32 times more volatile than ProShares Trust. It trades about -0.06 of its potential returns per unit of risk. ProShares Trust is currently generating about -0.19 per unit of risk. If you would invest  5,340  in Valkyrie Bitcoin Futures on December 30, 2024 and sell it today you would lose (1,476) from holding Valkyrie Bitcoin Futures or give up 27.64% 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 Futures  vs.  ProShares Trust

Valkyrie Bitcoin Futures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Valkyrie Bitcoin Futures 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 technical and fundamental 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.

ProShares Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite 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 recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

Pair Trading with Valkyrie Bitcoin and ProShares Trust

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

The idea behind Valkyrie Bitcoin Futures and ProShares Trust 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.