Correlation Between ProShares UltraShort and AXS TSLA
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and AXS TSLA 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 UltraShort and AXS TSLA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraShort Oil and AXS TSLA Bear, you can compare the effects of market volatilities on ProShares UltraShort and AXS TSLA 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 UltraShort with a short position of AXS TSLA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and AXS TSLA.
Diversification Opportunities for ProShares UltraShort and AXS TSLA
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ProShares and AXS is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort Oil and AXS TSLA Bear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXS TSLA Bear and ProShares UltraShort 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 UltraShort Oil are associated (or correlated) with AXS TSLA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXS TSLA Bear has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and AXS TSLA go up and down completely randomly.
Pair Corralation between ProShares UltraShort and AXS TSLA
Considering the 90-day investment horizon ProShares UltraShort Oil is expected to under-perform the AXS TSLA. But the etf apears to be less risky and, when comparing its historical volatility, ProShares UltraShort Oil is 12.0 times less risky than AXS TSLA. The etf trades about -0.04 of its potential returns per unit of risk. The AXS TSLA Bear is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,019 in AXS TSLA Bear on September 2, 2024 and sell it today you would earn a total of 1,286 from holding AXS TSLA Bear or generate 42.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraShort Oil vs. AXS TSLA Bear
Performance |
| Timeline |
| ProShares UltraShort Oil |
| AXS TSLA Bear |
ProShares UltraShort and AXS TSLA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and AXS TSLA
The main advantage of trading using opposite ProShares UltraShort and AXS TSLA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, AXS TSLA 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 AXS TSLA will offset losses from the drop in AXS TSLA's long position.The idea behind ProShares UltraShort Oil and AXS TSLA Bear 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.
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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