Correlation Between ProShares UltraShort and Roundhill Investments
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Roundhill Investments 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 Roundhill Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraShort QQQ and Roundhill Investments, you can compare the effects of market volatilities on ProShares UltraShort and Roundhill Investments 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 Roundhill Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Roundhill Investments.
Diversification Opportunities for ProShares UltraShort and Roundhill Investments
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and Roundhill is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort QQQ and Roundhill Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roundhill Investments 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 QQQ are associated (or correlated) with Roundhill Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roundhill Investments has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Roundhill Investments go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Roundhill Investments
If you would invest 2,024 in Roundhill Investments on October 20, 2024 and sell it today you would earn a total of 0.00 from holding Roundhill Investments or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 5.0% |
| Values | Daily Returns |
ProShares UltraShort QQQ vs. Roundhill Investments
Performance |
| Timeline |
| ProShares UltraShort QQQ |
| Roundhill Investments |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
ProShares UltraShort and Roundhill Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Roundhill Investments
The main advantage of trading using opposite ProShares UltraShort and Roundhill Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Roundhill Investments 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 Roundhill Investments will offset losses from the drop in Roundhill Investments' long position.The idea behind ProShares UltraShort QQQ and Roundhill Investments 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.
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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