Correlation Between IShares Core and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both IShares Core 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 IShares Core and ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core SP and ProShares UltraShort Basic, you can compare the effects of market volatilities on IShares Core 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 IShares Core with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and ProShares UltraShort.
Diversification Opportunities for IShares Core and ProShares UltraShort
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and ProShares is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and ProShares UltraShort Basic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort and IShares Core 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 iShares Core SP 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 has no effect on the direction of IShares Core i.e., IShares Core and ProShares UltraShort go up and down completely randomly.
Pair Corralation between IShares Core and ProShares UltraShort
Considering the 90-day investment horizon iShares Core SP is expected to generate 0.41 times more return on investment than ProShares UltraShort. However, iShares Core SP is 2.43 times less risky than ProShares UltraShort. It trades about 0.11 of its potential returns per unit of risk. ProShares UltraShort Basic is currently generating about -0.03 per unit of risk. If you would invest 38,861 in iShares Core SP on September 1, 2024 and sell it today you would earn a total of 21,646 from holding iShares Core SP or generate 55.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core SP vs. ProShares UltraShort Basic
Performance |
| Timeline |
| iShares Core SP |
| ProShares UltraShort |
IShares Core and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and ProShares UltraShort
The main advantage of trading using opposite IShares Core and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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.| IShares Core vs. iShares Core SP | IShares Core vs. iShares Core SP | IShares Core vs. iShares SP 500 | IShares Core vs. iShares Russell 2000 |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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