Correlation Between ProShares UltraShort and FT Cboe
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and FT Cboe 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 FT Cboe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraShort Euro and FT Cboe Vest, you can compare the effects of market volatilities on ProShares UltraShort and FT Cboe 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 FT Cboe. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and FT Cboe.
Diversification Opportunities for ProShares UltraShort and FT Cboe
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and DSEP is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort Euro and FT Cboe Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Cboe Vest 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 Euro are associated (or correlated) with FT Cboe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Cboe Vest has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and FT Cboe go up and down completely randomly.
Pair Corralation between ProShares UltraShort and FT Cboe
Considering the 90-day investment horizon ProShares UltraShort is expected to generate 1.99 times less return on investment than FT Cboe. In addition to that, ProShares UltraShort is 2.11 times more volatile than FT Cboe Vest. It trades about 0.03 of its total potential returns per unit of risk. FT Cboe Vest is currently generating about 0.13 per unit of volatility. If you would invest 3,125 in FT Cboe Vest on September 3, 2024 and sell it today you would earn a total of 965.00 from holding FT Cboe Vest or generate 30.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraShort Euro vs. FT Cboe Vest
Performance |
| Timeline |
| ProShares UltraShort Euro |
| FT Cboe Vest |
ProShares UltraShort and FT Cboe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and FT Cboe
The main advantage of trading using opposite ProShares UltraShort and FT Cboe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, FT Cboe 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 FT Cboe will offset losses from the drop in FT Cboe's long position.| ProShares UltraShort vs. FT Cboe Vest | ProShares UltraShort vs. Aquagold International | ProShares UltraShort vs. Morningstar Unconstrained Allocation | ProShares UltraShort vs. High Yield Municipal Fund |
| FT Cboe vs. FT Cboe Vest | FT Cboe vs. FT Cboe Vest | FT Cboe vs. First Trust Exchange Traded | FT Cboe vs. FT Cboe Vest |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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