Correlation Between Global X and ProShares Bitcoin

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

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

Diversification Opportunities for Global X and ProShares Bitcoin

-0.69

Correlation Coefficient

Global X  ProShares Bitcoin

Excellent diversification

The 3 months correlation between Global and ProShares is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and ProShares Bitcoin Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Bitcoin 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 Funds are associated (or correlated) with ProShares Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Bitcoin has no effect on the direction of Global X i.e., Global X and ProShares Bitcoin go up and down completely randomly.

Pair Corralation between Global X and ProShares Bitcoin

Considering the 90-day investment horizon Global X is expected to generate 16.68 times less return on investment than ProShares Bitcoin. But when comparing it to its historical volatility, Global X Funds is 3.66 times less risky than ProShares Bitcoin. It trades about 0.02 of its potential returns per unit of risk. ProShares Bitcoin Strategy is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  676.00  in ProShares Bitcoin Strategy on October 24, 2024 and sell it today you would earn a total of  1,857  from holding ProShares Bitcoin Strategy or generate 274.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	85.83%
Values	Daily Returns

Global X Funds  vs.  ProShares Bitcoin Strategy

Global X Funds

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Funds has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Global X is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

ProShares Bitcoin

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Bitcoin Strategy are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, ProShares Bitcoin displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global X and ProShares Bitcoin

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

The idea behind Global X Funds and ProShares 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.