Correlation Between ProShares UltraShort and T Rex
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and T Rex 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 T Rex 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 T Rex 2X Inverse, you can compare the effects of market volatilities on ProShares UltraShort and T Rex 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 T Rex. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and T Rex.
Diversification Opportunities for ProShares UltraShort and T Rex
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and ETQ is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort Euro and T Rex 2X Inverse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rex 2X 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 T Rex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rex 2X has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and T Rex go up and down completely randomly.
Pair Corralation between ProShares UltraShort and T Rex
Considering the 90-day investment horizon ProShares UltraShort is expected to generate 1.6 times less return on investment than T Rex. But when comparing it to its historical volatility, ProShares UltraShort Euro is 9.4 times less risky than T Rex. It trades about 0.18 of its potential returns per unit of risk. T Rex 2X Inverse is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 930.00 in T Rex 2X Inverse on October 21, 2024 and sell it today you would lose (14.00) from holding T Rex 2X Inverse or give up 1.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraShort Euro vs. T Rex 2X Inverse
Performance |
| Timeline |
| ProShares UltraShort Euro |
| T Rex 2X |
ProShares UltraShort and T Rex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and T Rex
The main advantage of trading using opposite ProShares UltraShort and T Rex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, T Rex 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 T Rex will offset losses from the drop in T Rex's long position.| ProShares UltraShort vs. ProShares UltraShort Yen | ProShares UltraShort vs. ProShares Ultra Euro | ProShares UltraShort vs. ProShares UltraShort FTSE | ProShares UltraShort vs. ProShares UltraShort Gold |
| T Rex vs. Invesco DB Dollar | T Rex vs. iPath Series B | T Rex vs. ProShares VIX Short Term | T Rex vs. ProShares VIX Mid Term |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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