Correlation Between US Treasury and UST Inc
Can any of the company-specific risk be diversified away by investing in both US Treasury and UST Inc 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 US Treasury and UST Inc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Treasury 12 and ProShares Ultra 7 10, you can compare the effects of market volatilities on US Treasury and UST Inc 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 US Treasury with a short position of UST Inc. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Treasury and UST Inc.
Diversification Opportunities for US Treasury and UST Inc
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between OBIL and UST is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding US Treasury 12 and ProShares Ultra 7 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra 7 and US Treasury 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 US Treasury 12 are associated (or correlated) with UST Inc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra 7 has no effect on the direction of US Treasury i.e., US Treasury and UST Inc go up and down completely randomly.
Pair Corralation between US Treasury and UST Inc
Given the investment horizon of 90 days US Treasury 12 is expected to generate 0.05 times more return on investment than UST Inc. However, US Treasury 12 is 19.32 times less risky than UST Inc. It trades about 0.4 of its potential returns per unit of risk. ProShares Ultra 7 10 is currently generating about -0.01 per unit of risk. If you would invest 4,765 in US Treasury 12 on November 9, 2024 and sell it today you would earn a total of 237.00 from holding US Treasury 12 or generate 4.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Treasury 12 vs. ProShares Ultra 7 10
Performance |
| Timeline |
| US Treasury 12 |
| ProShares Ultra 7 |
US Treasury and UST Inc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Treasury and UST Inc
The main advantage of trading using opposite US Treasury and UST Inc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Treasury position performs unexpectedly, UST Inc 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 UST Inc will offset losses from the drop in UST Inc's long position.| US Treasury vs. Rbb Fund | US Treasury vs. Rbb Fund | US Treasury vs. Rbb Fund | US Treasury vs. US Treasury 6 |
| UST Inc vs. ProShares Ultra 20 | UST Inc vs. Universal | UST Inc vs. Direxion Daily 7 10 | UST Inc vs. ProShares UltraShort 7 10 |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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