Correlation Between ProShares Trust and IShares Bitcoin

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

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

Diversification Opportunities for ProShares Trust and IShares Bitcoin

0.94

Correlation Coefficient

ProShares Trust  IShares Bitcoin

Almost no diversification

The 3 months correlation between ProShares and IShares is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and iShares Bitcoin Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Bitcoin Trust and ProShares Trust 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 ProShares Trust are associated (or correlated) with IShares Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Bitcoin Trust has no effect on the direction of ProShares Trust i.e., ProShares Trust and IShares Bitcoin go up and down completely randomly.

Pair Corralation between ProShares Trust and IShares Bitcoin

Given the investment horizon of 90 days ProShares Trust is expected to generate 1.33 times more return on investment than IShares Bitcoin. However, ProShares Trust is 1.33 times more volatile than iShares Bitcoin Trust. It trades about 0.28 of its potential returns per unit of risk. iShares Bitcoin Trust is currently generating about 0.31 per unit of risk. If you would invest  5,285  in ProShares Trust on August 30, 2024 and sell it today you would earn a total of  1,994  from holding ProShares Trust or generate 37.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.65%
Values	Daily Returns

ProShares Trust  vs.  iShares Bitcoin Trust

ProShares Trust

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, ProShares Trust demonstrated solid returns over the last few months and may actually be approaching a breakup point.

iShares Bitcoin Trust

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Bitcoin Trust are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent forward indicators, IShares Bitcoin unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares Trust and IShares Bitcoin

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

The idea behind ProShares Trust and iShares Bitcoin 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.