Correlation Between ProShares Short and ProShares Decline
Can any of the company-specific risk be diversified away by investing in both ProShares Short and ProShares Decline 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 ProShares Short and ProShares Decline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Short Dow30 and ProShares Decline of, you can compare the effects of market volatilities on ProShares Short and ProShares Decline 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 ProShares Short with a short position of ProShares Decline. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Short and ProShares Decline.
Diversification Opportunities for ProShares Short and ProShares Decline
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and ProShares is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Short Dow30 and ProShares Decline of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Decline and ProShares Short 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 ProShares Short Dow30 are associated (or correlated) with ProShares Decline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Decline has no effect on the direction of ProShares Short i.e., ProShares Short and ProShares Decline go up and down completely randomly.
Pair Corralation between ProShares Short and ProShares Decline
Considering the 90-day investment horizon ProShares Short Dow30 is expected to generate 0.94 times more return on investment than ProShares Decline. However, ProShares Short Dow30 is 1.07 times less risky than ProShares Decline. It trades about -0.22 of its potential returns per unit of risk. ProShares Decline of is currently generating about -0.23 per unit of risk. If you would invest 2,703 in ProShares Short Dow30 on August 26, 2024 and sell it today you would lose (125.00) from holding ProShares Short Dow30 or give up 4.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Short Dow30 vs. ProShares Decline of
Performance |
| Timeline |
| ProShares Short Dow30 |
| ProShares Decline |
ProShares Short and ProShares Decline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Short and ProShares Decline
The main advantage of trading using opposite ProShares Short and ProShares Decline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Short position performs unexpectedly, ProShares Decline 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 Decline will offset losses from the drop in ProShares Decline's long position.| ProShares Short vs. ProShares Short QQQ | ProShares Short vs. ProShares Short SP500 | ProShares Short vs. ProShares UltraShort Dow30 | ProShares Short vs. ProShares Short Russell2000 |
| ProShares Decline vs. ProShares Long OnlineShort | ProShares Decline vs. ProShares Short High | ProShares Decline vs. ProShares Short Real | ProShares Decline vs. ProShares Short Financials |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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