Correlation Between First Trust and Valkyrie Bitcoin

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

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

Diversification Opportunities for First Trust and Valkyrie Bitcoin

0.27

Correlation Coefficient

First Trust  Valkyrie Bitcoin

Modest diversification

The 3 months correlation between First and Valkyrie is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Indxx and Valkyrie Bitcoin Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valkyrie Bitcoin Strategy and First 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 First Trust Indxx 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 Strategy has no effect on the direction of First Trust i.e., First Trust and Valkyrie Bitcoin go up and down completely randomly.

Pair Corralation between First Trust and Valkyrie Bitcoin

Given the investment horizon of 90 days First Trust Indxx is expected to under-perform the Valkyrie Bitcoin. But the etf apears to be less risky and, when comparing its historical volatility, First Trust Indxx is 7.24 times less risky than Valkyrie Bitcoin. The etf trades about 0.0 of its potential returns per unit of risk. The Valkyrie Bitcoin Strategy is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,676  in Valkyrie Bitcoin Strategy on September 26, 2024 and sell it today you would lose (129.00) from holding Valkyrie Bitcoin Strategy or give up 7.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

First Trust Indxx  vs.  Valkyrie Bitcoin Strategy

First Trust Indxx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Trust Indxx has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, First Trust is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Valkyrie Bitcoin Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valkyrie Bitcoin Strategy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Valkyrie Bitcoin is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with First Trust and Valkyrie Bitcoin

The main advantage of trading using opposite First Trust and Valkyrie Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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 First Trust Indxx and Valkyrie Bitcoin Strategy 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.