Correlation Between ProShares UltraShort and Bank Of Montreal
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Bank Of Montreal 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 Bank Of Montreal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraShort Bloomberg and Bank Of Montreal, you can compare the effects of market volatilities on ProShares UltraShort and Bank Of Montreal 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 Bank Of Montreal. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Bank Of Montreal.
Diversification Opportunities for ProShares UltraShort and Bank Of Montreal
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ProShares and Bank is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort Bloomberg and Bank Of Montreal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Of Montreal 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 Bloomberg are associated (or correlated) with Bank Of Montreal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Of Montreal has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Bank Of Montreal go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Bank Of Montreal
Given the investment horizon of 90 days ProShares UltraShort is expected to generate 3.15 times less return on investment than Bank Of Montreal. In addition to that, ProShares UltraShort is 2.07 times more volatile than Bank Of Montreal. It trades about 0.01 of its total potential returns per unit of risk. Bank Of Montreal is currently generating about 0.09 per unit of volatility. If you would invest 3,017 in Bank Of Montreal on September 3, 2024 and sell it today you would earn a total of 596.00 from holding Bank Of Montreal or generate 19.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 46.99% |
| Values | Daily Returns |
ProShares UltraShort Bloomberg vs. Bank Of Montreal
Performance |
| Timeline |
| ProShares UltraShort |
| Bank Of Montreal |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
ProShares UltraShort and Bank Of Montreal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Bank Of Montreal
The main advantage of trading using opposite ProShares UltraShort and Bank Of Montreal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Bank Of Montreal 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 Bank Of Montreal will offset losses from the drop in Bank Of Montreal's long position.The idea behind ProShares UltraShort Bloomberg and Bank Of Montreal 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.
| Bank Of Montreal vs. ProShares Ultra SP500 | Bank Of Montreal vs. Direxion Daily SP500 | Bank Of Montreal vs. ProShares Ultra QQQ | Bank Of Montreal vs. Direxion Daily SP |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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