Correlation Between Disney and ProShares UltraPro
Can any of the company-specific risk be diversified away by investing in both Disney and ProShares UltraPro 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 Disney and ProShares UltraPro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and ProShares UltraPro Short, you can compare the effects of market volatilities on Disney and ProShares UltraPro 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 Disney with a short position of ProShares UltraPro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and ProShares UltraPro.
Diversification Opportunities for Disney and ProShares UltraPro
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Disney and ProShares is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and ProShares UltraPro Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraPro Short and Disney 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 Walt Disney are associated (or correlated) with ProShares UltraPro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraPro Short has no effect on the direction of Disney i.e., Disney and ProShares UltraPro go up and down completely randomly.
Pair Corralation between Disney and ProShares UltraPro
Considering the 90-day investment horizon Walt Disney is expected to generate 0.56 times more return on investment than ProShares UltraPro. However, Walt Disney is 1.77 times less risky than ProShares UltraPro. It trades about 0.51 of its potential returns per unit of risk. ProShares UltraPro Short is currently generating about -0.06 per unit of risk. If you would invest 9,620 in Walt Disney on September 1, 2024 and sell it today you would earn a total of 2,127 from holding Walt Disney or generate 22.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Walt Disney vs. ProShares UltraPro Short
Performance |
| Timeline |
| Walt Disney |
| ProShares UltraPro Short |
Disney and ProShares UltraPro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and ProShares UltraPro
The main advantage of trading using opposite Disney and ProShares UltraPro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, ProShares UltraPro 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 UltraPro will offset losses from the drop in ProShares UltraPro's long position.| Disney vs. ADTRAN Inc | Disney vs. Belden Inc | Disney vs. ADC Therapeutics SA | Disney vs. Comtech Telecommunications Corp |
| ProShares UltraPro vs. Direxion Daily 20 | ProShares UltraPro vs. ProShares Short 20 | ProShares UltraPro vs. ProShares UltraShort 7 10 | ProShares UltraPro vs. Direxion Daily 7 10 |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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