Correlation Between BetaPro NASDAQ and Bitcoin ETF

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

By analyzing existing cross correlation between BetaPro NASDAQ 100 2x and Bitcoin ETF CAD, you can compare the effects of market volatilities on BetaPro NASDAQ and Bitcoin ETF 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 BetaPro NASDAQ with a short position of Bitcoin ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro NASDAQ and Bitcoin ETF.

Diversification Opportunities for BetaPro NASDAQ and Bitcoin ETF

-0.9

Correlation Coefficient

BetaPro NASDAQ  Bitcoin ETF

Pay attention - limited upside

The 3 months correlation between BetaPro and Bitcoin is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro NASDAQ 100 2x and Bitcoin ETF CAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin ETF CAD and BetaPro NASDAQ 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 BetaPro NASDAQ 100 2x are associated (or correlated) with Bitcoin ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin ETF CAD has no effect on the direction of BetaPro NASDAQ i.e., BetaPro NASDAQ and Bitcoin ETF go up and down completely randomly.

Pair Corralation between BetaPro NASDAQ and Bitcoin ETF

Assuming the 90 days trading horizon BetaPro NASDAQ 100 2x is expected to under-perform the Bitcoin ETF. But the etf apears to be less risky and, when comparing its historical volatility, BetaPro NASDAQ 100 2x is 1.44 times less risky than Bitcoin ETF. The etf trades about -0.09 of its potential returns per unit of risk. The Bitcoin ETF CAD is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4,970  in Bitcoin ETF CAD on September 23, 2024 and sell it today you would lose (21.00) from holding Bitcoin ETF CAD or give up 0.42% of portfolio value over 90 days.

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

BetaPro NASDAQ 100 2x  vs.  Bitcoin ETF CAD

BetaPro NASDAQ 100

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BetaPro NASDAQ 100 2x has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Bitcoin ETF CAD

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin ETF CAD are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Bitcoin ETF displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BetaPro NASDAQ and Bitcoin ETF

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

The idea behind BetaPro NASDAQ 100 2x and Bitcoin ETF CAD 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.