Correlation Between ProShares UltraShort and Virtus WMC
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Virtus WMC 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 Virtus WMC 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 Virtus WMC International, you can compare the effects of market volatilities on ProShares UltraShort and Virtus WMC 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 Virtus WMC. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Virtus WMC.
Diversification Opportunities for ProShares UltraShort and Virtus WMC
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and Virtus is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort MSCI and Virtus WMC International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus WMC International 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 Virtus WMC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus WMC International has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Virtus WMC go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Virtus WMC
Considering the 90-day investment horizon ProShares UltraShort MSCI is expected to under-perform the Virtus WMC. In addition to that, ProShares UltraShort is 3.21 times more volatile than Virtus WMC International. It trades about -0.02 of its total potential returns per unit of risk. Virtus WMC International is currently generating about 0.27 per unit of volatility. If you would invest 2,648 in Virtus WMC International on October 24, 2024 and sell it today you would earn a total of 79.00 from holding Virtus WMC International or generate 2.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraShort MSCI vs. Virtus WMC International
Performance |
| Timeline |
| ProShares UltraShort MSCI |
| Virtus WMC International |
ProShares UltraShort and Virtus WMC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Virtus WMC
The main advantage of trading using opposite ProShares UltraShort and Virtus WMC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Virtus WMC 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 Virtus WMC will offset losses from the drop in Virtus WMC'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 |
| Virtus WMC vs. Franklin Templeton ETF | Virtus WMC vs. Altrius Global Dividend | Virtus WMC vs. Invesco Exchange Traded | Virtus WMC vs. Franklin International Core |
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 Stocks Directory module to find actively traded stocks across global markets.
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