Correlation Between ProShares Short and MicroSectorsTM Oil
Can any of the company-specific risk be diversified away by investing in both ProShares Short and MicroSectorsTM Oil 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 Short and MicroSectorsTM Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Short QQQ and MicroSectorsTM Oil Gas, you can compare the effects of market volatilities on ProShares Short and MicroSectorsTM Oil 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 Short with a short position of MicroSectorsTM Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Short and MicroSectorsTM Oil.
Diversification Opportunities for ProShares Short and MicroSectorsTM Oil
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and MicroSectorsTM is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Short QQQ and MicroSectorsTM Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectorsTM Oil Gas and ProShares Short 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 Short QQQ are associated (or correlated) with MicroSectorsTM Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroSectorsTM Oil Gas has no effect on the direction of ProShares Short i.e., ProShares Short and MicroSectorsTM Oil go up and down completely randomly.
Pair Corralation between ProShares Short and MicroSectorsTM Oil
Considering the 90-day investment horizon ProShares Short QQQ is expected to generate 0.34 times more return on investment than MicroSectorsTM Oil. However, ProShares Short QQQ is 2.98 times less risky than MicroSectorsTM Oil. It trades about -0.02 of its potential returns per unit of risk. MicroSectorsTM Oil Gas is currently generating about -0.31 per unit of risk. If you would invest 3,868 in ProShares Short QQQ on August 30, 2024 and sell it today you would lose (24.00) from holding ProShares Short QQQ or give up 0.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Short QQQ vs. MicroSectorsTM Oil Gas
Performance |
| Timeline |
| ProShares Short QQQ |
| MicroSectorsTM Oil Gas |
ProShares Short and MicroSectorsTM Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Short and MicroSectorsTM Oil
The main advantage of trading using opposite ProShares Short and MicroSectorsTM Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Short position performs unexpectedly, MicroSectorsTM Oil 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 MicroSectorsTM Oil will offset losses from the drop in MicroSectorsTM Oil's long position.| ProShares Short vs. ProShares Short SP500 | ProShares Short vs. ProShares Short Dow30 | ProShares Short vs. ProShares Short Russell2000 | ProShares Short vs. ProShares UltraShort QQQ |
| MicroSectorsTM Oil vs. MicroSectorsTM Oil Gas | MicroSectorsTM Oil vs. UBS ETRACS | MicroSectorsTM Oil vs. Direxion Daily SP | MicroSectorsTM Oil vs. MicroSectors FANG Index |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |