Correlation Between ProShares UltraShort and Stone Ridge
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Stone Ridge 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 Stone Ridge 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 Stone Ridge 2054, you can compare the effects of market volatilities on ProShares UltraShort and Stone Ridge 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 Stone Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Stone Ridge.
Diversification Opportunities for ProShares UltraShort and Stone Ridge
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and Stone is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort MSCI and Stone Ridge 2054 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Ridge 2054 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 Stone Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Ridge 2054 has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Stone Ridge go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Stone Ridge
Considering the 90-day investment horizon ProShares UltraShort MSCI is expected to under-perform the Stone Ridge. In addition to that, ProShares UltraShort is 4.15 times more volatile than Stone Ridge 2054. It trades about -0.15 of its total potential returns per unit of risk. Stone Ridge 2054 is currently generating about 0.13 per unit of volatility. If you would invest 14,507 in Stone Ridge 2054 on December 24, 2024 and sell it today you would earn a total of 206.00 from holding Stone Ridge 2054 or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraShort MSCI vs. Stone Ridge 2054
Performance |
| Timeline |
| ProShares UltraShort MSCI |
| Stone Ridge 2054 |
ProShares UltraShort and Stone Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Stone Ridge
The main advantage of trading using opposite ProShares UltraShort and Stone Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Stone Ridge 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 Stone Ridge will offset losses from the drop in Stone Ridge's long position.| ProShares UltraShort vs. ProShares UltraShort MSCI | ProShares UltraShort vs. ProShares Short MSCI | ProShares UltraShort vs. ProShares UltraShort MSCI | ProShares UltraShort vs. ProShares UltraShort Health |
| Stone Ridge vs. Vanguard 0 3 Month | Stone Ridge vs. Global X Funds | Stone Ridge vs. Texas Capital Funds | Stone Ridge vs. Vanguard Ultra Short Treasury |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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