Correlation Between Boeing and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both Boeing and ProShares UltraShort 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 Boeing and ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and ProShares UltraShort Nasdaq, you can compare the effects of market volatilities on Boeing and ProShares UltraShort 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 Boeing with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and ProShares UltraShort.
Diversification Opportunities for Boeing and ProShares UltraShort
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Boeing and ProShares is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and ProShares UltraShort Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort and Boeing 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 The Boeing are associated (or correlated) with ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort has no effect on the direction of Boeing i.e., Boeing and ProShares UltraShort go up and down completely randomly.
Pair Corralation between Boeing and ProShares UltraShort
Allowing for the 90-day total investment horizon Boeing is expected to generate 1.1 times less return on investment than ProShares UltraShort. But when comparing it to its historical volatility, The Boeing is 1.19 times less risky than ProShares UltraShort. It trades about 0.14 of its potential returns per unit of risk. ProShares UltraShort Nasdaq is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,498 in ProShares UltraShort Nasdaq on September 13, 2024 and sell it today you would earn a total of 204.00 from holding ProShares UltraShort Nasdaq or generate 13.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boeing vs. ProShares UltraShort Nasdaq
Performance |
| Timeline |
| Boeing |
| ProShares UltraShort |
Boeing and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and ProShares UltraShort
The main advantage of trading using opposite Boeing and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, ProShares UltraShort 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 UltraShort will offset losses from the drop in ProShares UltraShort's long position.The idea behind The Boeing and ProShares UltraShort Nasdaq 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.| ProShares UltraShort vs. ProShares Ultra Nasdaq | ProShares UltraShort vs. ProShares UltraShort MSCI | ProShares UltraShort vs. ProShares UltraShort Health | ProShares UltraShort vs. ProShares UltraShort FTSE |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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