Correlation Between ProShares Trust and Invesco Galaxy

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

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

Diversification Opportunities for ProShares Trust and Invesco Galaxy

-0.77

Correlation Coefficient

ProShares Trust  Invesco Galaxy

Pay attention - limited upside

The 3 months correlation between ProShares and Invesco is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and Invesco Galaxy Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Galaxy Bitcoin 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 Invesco Galaxy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Galaxy Bitcoin has no effect on the direction of ProShares Trust i.e., ProShares Trust and Invesco Galaxy go up and down completely randomly.

Pair Corralation between ProShares Trust and Invesco Galaxy

Given the investment horizon of 90 days ProShares Trust is expected to under-perform the Invesco Galaxy. In addition to that, ProShares Trust is 2.64 times more volatile than Invesco Galaxy Bitcoin. It trades about -0.12 of its total potential returns per unit of risk. Invesco Galaxy Bitcoin is currently generating about 0.22 per unit of volatility. If you would invest  6,739  in Invesco Galaxy Bitcoin on October 22, 2024 and sell it today you would earn a total of  3,727  from holding Invesco Galaxy Bitcoin or generate 55.3% return on investment over 90 days.

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

ProShares Trust  vs.  Invesco Galaxy Bitcoin

ProShares Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Etf's technical indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Invesco Galaxy Bitcoin

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Galaxy Bitcoin are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Invesco Galaxy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares Trust and Invesco Galaxy

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

The idea behind ProShares Trust and Invesco Galaxy Bitcoin 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.