Correlation Between American Funds and ProShares Short
Can any of the company-specific risk be diversified away by investing in both American Funds and ProShares Short 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 American Funds and ProShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Fundamental and ProShares Short MSCI, you can compare the effects of market volatilities on American Funds and ProShares Short 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 American Funds with a short position of ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and ProShares Short.
Diversification Opportunities for American Funds and ProShares Short
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and ProShares is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and ProShares Short MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short MSCI and American Funds 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 American Funds Fundamental are associated (or correlated) with ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short MSCI has no effect on the direction of American Funds i.e., American Funds and ProShares Short go up and down completely randomly.
Pair Corralation between American Funds and ProShares Short
Assuming the 90 days horizon American Funds Fundamental is expected to generate 1.37 times more return on investment than ProShares Short. However, American Funds is 1.37 times more volatile than ProShares Short MSCI. It trades about 0.2 of its potential returns per unit of risk. ProShares Short MSCI is currently generating about -0.1 per unit of risk. If you would invest 8,194 in American Funds Fundamental on October 24, 2024 and sell it today you would earn a total of 259.00 from holding American Funds Fundamental or generate 3.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Fundamental vs. ProShares Short MSCI
Performance |
| Timeline |
| American Funds Funda |
| ProShares Short MSCI |
American Funds and ProShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and ProShares Short
The main advantage of trading using opposite American Funds and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, ProShares Short 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 ProShares Short will offset losses from the drop in ProShares Short's long position.| American Funds vs. Virtus High Yield | American Funds vs. Ab High Income | American Funds vs. Multi Manager High Yield | American Funds vs. Ab High Income |
| ProShares Short vs. ProShares Short MSCI | ProShares Short vs. ProShares UltraShort MSCI | ProShares Short vs. ProShares UltraShort MSCI | ProShares Short vs. ProShares Short MidCap400 |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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