Correlation Between ProShares UltraShort and AdvisorShares Dorsey
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and AdvisorShares Dorsey 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 AdvisorShares Dorsey into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraShort MSCI and AdvisorShares Dorsey Wright, you can compare the effects of market volatilities on ProShares UltraShort and AdvisorShares Dorsey 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 AdvisorShares Dorsey. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and AdvisorShares Dorsey.
Diversification Opportunities for ProShares UltraShort and AdvisorShares Dorsey
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ProShares and AdvisorShares is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort MSCI and AdvisorShares Dorsey Wright in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares Dorsey 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 MSCI are associated (or correlated) with AdvisorShares Dorsey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares Dorsey has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and AdvisorShares Dorsey go up and down completely randomly.
Pair Corralation between ProShares UltraShort and AdvisorShares Dorsey
Considering the 90-day investment horizon ProShares UltraShort MSCI is expected to generate 2.02 times more return on investment than AdvisorShares Dorsey. However, ProShares UltraShort is 2.02 times more volatile than AdvisorShares Dorsey Wright. It trades about -0.01 of its potential returns per unit of risk. AdvisorShares Dorsey Wright is currently generating about -0.07 per unit of risk. If you would invest 1,757 in ProShares UltraShort MSCI on September 3, 2024 and sell it today you would lose (62.00) from holding ProShares UltraShort MSCI or give up 3.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraShort MSCI vs. AdvisorShares Dorsey Wright
Performance |
| Timeline |
| ProShares UltraShort MSCI |
| AdvisorShares Dorsey |
ProShares UltraShort and AdvisorShares Dorsey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and AdvisorShares Dorsey
The main advantage of trading using opposite ProShares UltraShort and AdvisorShares Dorsey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, AdvisorShares Dorsey 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 AdvisorShares Dorsey will offset losses from the drop in AdvisorShares Dorsey's long position.| ProShares UltraShort vs. ProShares UltraShort FTSE | ProShares UltraShort vs. ProShares UltraShort MSCI | ProShares UltraShort vs. ProShares Ultra MSCI | ProShares UltraShort vs. Direxion Daily MSCI |
| AdvisorShares Dorsey vs. ProShares UltraShort FTSE | AdvisorShares Dorsey vs. ProShares UltraShort MSCI | AdvisorShares Dorsey vs. ProShares Ultra MSCI | AdvisorShares Dorsey vs. ProShares UltraShort MSCI |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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