Correlation Between NKEQ and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both NKEQ 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 NKEQ and ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NKEQ and ProShares UltraShort MSCI, you can compare the effects of market volatilities on NKEQ 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 NKEQ with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of NKEQ and ProShares UltraShort.
Diversification Opportunities for NKEQ and ProShares UltraShort
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NKEQ and ProShares is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding NKEQ 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 NKEQ 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 NKEQ 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 NKEQ i.e., NKEQ and ProShares UltraShort go up and down completely randomly.
Pair Corralation between NKEQ and ProShares UltraShort
If you would invest 1,257 in ProShares UltraShort MSCI on September 12, 2024 and sell it today you would earn a total of 381.00 from holding ProShares UltraShort MSCI or generate 30.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.28% |
| Values | Daily Returns |
NKEQ vs. ProShares UltraShort MSCI
Performance |
| Timeline |
| NKEQ |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| ProShares UltraShort MSCI |
NKEQ and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NKEQ and ProShares UltraShort
The main advantage of trading using opposite NKEQ and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NKEQ 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.| NKEQ vs. ProShares UltraShort MSCI | NKEQ vs. ProShares UltraShort MSCI | NKEQ vs. ProShares UltraShort Euro | NKEQ vs. ProShares UltraShort MSCI |
| ProShares UltraShort vs. ProShares UltraShort FTSE | ProShares UltraShort vs. ProShares UltraShort MSCI | ProShares UltraShort vs. ProShares Ultra MSCI | ProShares UltraShort vs. ProShares UltraShort MSCI |
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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