Correlation Between Franklin Bitcoin and ProShares Trust

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

Diversification Opportunities for Franklin Bitcoin and ProShares Trust

-0.53

Correlation Coefficient

Franklin Bitcoin  ProShares Trust

Excellent diversification

The 3 months correlation between Franklin and ProShares is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Bitcoin ETF and ProShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Trust and Franklin 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 Franklin Bitcoin ETF 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 Franklin Bitcoin i.e., Franklin Bitcoin and ProShares Trust go up and down completely randomly.

Pair Corralation between Franklin Bitcoin and ProShares Trust

Given the investment horizon of 90 days Franklin Bitcoin ETF is expected to under-perform the ProShares Trust. But the etf apears to be less risky and, when comparing its historical volatility, Franklin Bitcoin ETF is 3.23 times less risky than ProShares Trust. The etf trades about -0.05 of its potential returns per unit of risk. The ProShares Trust is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,093  in ProShares Trust on November 28, 2024 and sell it today you would earn a total of  1,240  from holding ProShares Trust or generate 59.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

Franklin Bitcoin ETF  vs.  ProShares Trust

Franklin Bitcoin ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin Bitcoin ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

ProShares Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Trust are ranked lower than 10 (%) 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.

Pair Trading with Franklin Bitcoin and ProShares Trust

The main advantage of trading using opposite Franklin Bitcoin and ProShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin 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 Franklin Bitcoin ETF 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 Anywhere module to track or share privately all of your investments from the convenience of any device.