Correlation Between ETRACS 2x and ETF Series
Can any of the company-specific risk be diversified away by investing in both ETRACS 2x and ETF Series 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 ETRACS 2x and ETF Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETRACS 2x Leveraged and ETF Series Solutions, you can compare the effects of market volatilities on ETRACS 2x and ETF Series 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 ETRACS 2x with a short position of ETF Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS 2x and ETF Series.
Diversification Opportunities for ETRACS 2x and ETF Series
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between ETRACS and ETF is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS 2x Leveraged and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions and ETRACS 2x 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 ETRACS 2x Leveraged are associated (or correlated) with ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of ETRACS 2x i.e., ETRACS 2x and ETF Series go up and down completely randomly.
Pair Corralation between ETRACS 2x and ETF Series
Given the investment horizon of 90 days ETRACS 2x Leveraged is expected to under-perform the ETF Series. In addition to that, ETRACS 2x is 2.5 times more volatile than ETF Series Solutions. It trades about -0.12 of its total potential returns per unit of risk. ETF Series Solutions is currently generating about 0.42 per unit of volatility. If you would invest 3,582 in ETF Series Solutions on May 2, 2025 and sell it today you would earn a total of 134.00 from holding ETF Series Solutions or generate 3.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
ETRACS 2x Leveraged vs. ETF Series Solutions
Performance |
| Timeline |
| ETRACS 2x Leveraged |
| ETF Series Solutions |
ETRACS 2x and ETF Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETRACS 2x and ETF Series
The main advantage of trading using opposite ETRACS 2x and ETF Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS 2x position performs unexpectedly, ETF Series 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 ETF Series will offset losses from the drop in ETF Series' long position.| ETRACS 2x vs. First Trust Dorsey | ETRACS 2x vs. Direxion Daily MSCI | ETRACS 2x vs. MFUT | ETRACS 2x vs. VanEck Morningstar Wide |
| ETF Series vs. First Trust Dorsey | ETF Series vs. Direxion Daily MSCI | ETF Series vs. MFUT | ETF Series vs. VanEck Morningstar Wide |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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