Correlation Between ProShares Trust and VanEck Bitcoin

Can any of the company-specific risk be diversified away by investing in both ProShares Trust and VanEck 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 VanEck 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 VanEck Bitcoin Trust, you can compare the effects of market volatilities on ProShares Trust and VanEck 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 VanEck Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Trust and VanEck Bitcoin.

Diversification Opportunities for ProShares Trust and VanEck Bitcoin

-0.9

Correlation Coefficient

ProShares Trust  VanEck Bitcoin

Pay attention - limited upside

The 3 months correlation between ProShares and VanEck is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and VanEck Bitcoin Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck 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 VanEck Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Bitcoin Trust has no effect on the direction of ProShares Trust i.e., ProShares Trust and VanEck Bitcoin go up and down completely randomly.

Pair Corralation between ProShares Trust and VanEck Bitcoin

Given the investment horizon of 90 days ProShares Trust is expected to generate 3.13 times more return on investment than VanEck Bitcoin. However, ProShares Trust is 3.13 times more volatile than VanEck Bitcoin Trust. It trades about 0.2 of its potential returns per unit of risk. VanEck Bitcoin Trust is currently generating about -0.05 per unit of risk. If you would invest  2,172  in ProShares Trust on December 30, 2024 and sell it today you would earn a total of  2,996  from holding ProShares Trust or generate 137.94% return on investment over 90 days.

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

ProShares Trust  vs.  VanEck Bitcoin Trust

ProShares Trust

Risk-Adjusted Performance

Good

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

VanEck Bitcoin Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck Bitcoin Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Etf's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Pair Trading with ProShares Trust and VanEck Bitcoin

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

The idea behind ProShares Trust and VanEck 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.