Correlation Between Dimensional International and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both Dimensional International 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 Dimensional International and ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional International High and ProShares UltraShort FTSE, you can compare the effects of market volatilities on Dimensional International 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 Dimensional International with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional International and ProShares UltraShort.
Diversification Opportunities for Dimensional International and ProShares UltraShort
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dimensional and ProShares is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional International High and ProShares UltraShort FTSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort FTSE and Dimensional International 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 Dimensional International High 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 FTSE has no effect on the direction of Dimensional International i.e., Dimensional International and ProShares UltraShort go up and down completely randomly.
Pair Corralation between Dimensional International and ProShares UltraShort
Given the investment horizon of 90 days Dimensional International High is expected to generate 0.2 times more return on investment than ProShares UltraShort. However, Dimensional International High is 5.09 times less risky than ProShares UltraShort. It trades about 0.03 of its potential returns per unit of risk. ProShares UltraShort FTSE is currently generating about -0.07 per unit of risk. If you would invest 2,501 in Dimensional International High on November 3, 2024 and sell it today you would earn a total of 130.00 from holding Dimensional International High or generate 5.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional International High vs. ProShares UltraShort FTSE
Performance |
| Timeline |
| Dimensional International |
| ProShares UltraShort FTSE |
Dimensional International and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional International and ProShares UltraShort
The main advantage of trading using opposite Dimensional International and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional International 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 Dimensional International High and ProShares UltraShort FTSE 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. FT Vest Equity | ProShares UltraShort vs. Northern Lights | ProShares UltraShort vs. Dimensional International High | ProShares UltraShort vs. First Trust Exchange Traded |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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