Correlation Between UBS ETRACS and Valkyrie Bitcoin

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

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

Diversification Opportunities for UBS ETRACS and Valkyrie Bitcoin

0.2

Correlation Coefficient

UBS ETRACS  Valkyrie Bitcoin

Modest diversification

The 3 months correlation between UBS and Valkyrie is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETRACS and Valkyrie Bitcoin Miners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valkyrie Bitcoin Miners and UBS ETRACS 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 UBS ETRACS are associated (or correlated) with Valkyrie Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valkyrie Bitcoin Miners has no effect on the direction of UBS ETRACS i.e., UBS ETRACS and Valkyrie Bitcoin go up and down completely randomly.

Pair Corralation between UBS ETRACS and Valkyrie Bitcoin

Given the investment horizon of 90 days UBS ETRACS is expected to generate 1.41 times more return on investment than Valkyrie Bitcoin. However, UBS ETRACS is 1.41 times more volatile than Valkyrie Bitcoin Miners. It trades about -0.04 of its potential returns per unit of risk. Valkyrie Bitcoin Miners is currently generating about -0.12 per unit of risk. If you would invest  2,185  in UBS ETRACS on December 28, 2024 and sell it today you would lose (625.00) from holding UBS ETRACS or give up 28.6% of portfolio value over 90 days.

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

UBS ETRACS   vs.  Valkyrie Bitcoin Miners

UBS ETRACS

Risk-Adjusted Performance

Very Weak

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

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 unsteady 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.

Pair Trading with UBS ETRACS and Valkyrie Bitcoin

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

The idea behind UBS ETRACS and Valkyrie Bitcoin Miners 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.