Correlation Between Intel and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both Intel and ProShares UltraShort 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 Intel and ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intel and ProShares UltraShort MSCI, you can compare the effects of market volatilities on Intel and ProShares UltraShort 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 Intel with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and ProShares UltraShort.
Diversification Opportunities for Intel and ProShares UltraShort
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Intel and ProShares is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Intel and ProShares UltraShort MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort MSCI and Intel 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 Intel are associated (or correlated) with ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort MSCI has no effect on the direction of Intel i.e., Intel and ProShares UltraShort go up and down completely randomly.
Pair Corralation between Intel and ProShares UltraShort
Given the investment horizon of 90 days Intel is expected to under-perform the ProShares UltraShort. In addition to that, Intel is 1.68 times more volatile than ProShares UltraShort MSCI. It trades about -0.07 of its total potential returns per unit of risk. ProShares UltraShort MSCI is currently generating about -0.03 per unit of volatility. If you would invest 1,957 in ProShares UltraShort MSCI on August 27, 2024 and sell it today you would lose (259.00) from holding ProShares UltraShort MSCI or give up 13.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intel vs. ProShares UltraShort MSCI
Performance |
| Timeline |
| Intel |
| ProShares UltraShort MSCI |
Intel and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intel and ProShares UltraShort
The main advantage of trading using opposite Intel and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel position performs unexpectedly, ProShares UltraShort 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 ProShares UltraShort will offset losses from the drop in ProShares UltraShort's long position.The idea behind Intel and ProShares UltraShort MSCI pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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