Correlation Between Valkyrie Bitcoin and Direxion Daily

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

By analyzing existing cross correlation between Valkyrie Bitcoin Miners and Direxion Daily NVDA, you can compare the effects of market volatilities on Valkyrie Bitcoin and Direxion Daily 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 Valkyrie Bitcoin with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valkyrie Bitcoin and Direxion Daily.

Diversification Opportunities for Valkyrie Bitcoin and Direxion Daily

0.89

Correlation Coefficient

Valkyrie Bitcoin  Direxion Daily

Very poor diversification

The 3 months correlation between Valkyrie and Direxion is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Valkyrie Bitcoin Miners and Direxion Daily NVDA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily NVDA and Valkyrie 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 Valkyrie Bitcoin Miners are associated (or correlated) with Direxion Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Daily NVDA has no effect on the direction of Valkyrie Bitcoin i.e., Valkyrie Bitcoin and Direxion Daily go up and down completely randomly.

Pair Corralation between Valkyrie Bitcoin and Direxion Daily

Given the investment horizon of 90 days Valkyrie Bitcoin Miners is expected to under-perform the Direxion Daily. But the etf apears to be less risky and, when comparing its historical volatility, Valkyrie Bitcoin Miners is 1.52 times less risky than Direxion Daily. The etf trades about -0.13 of its potential returns per unit of risk. The Direxion Daily NVDA is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  9,758  in Direxion Daily NVDA on December 30, 2024 and sell it today you would lose (4,409) from holding Direxion Daily NVDA or give up 45.18% of portfolio value over 90 days.

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

Valkyrie Bitcoin Miners  vs.  Direxion Daily NVDA

Valkyrie Bitcoin Miners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Valkyrie Bitcoin Miners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Etf's primary indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

Direxion Daily NVDA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Direxion Daily NVDA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with Valkyrie Bitcoin and Direxion Daily

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

The idea behind Valkyrie Bitcoin Miners and Direxion Daily NVDA 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.