Correlation Between ProShares UltraShort and Vulcan Value
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Vulcan Value 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 Vulcan Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraShort Health and Vulcan Value Partners, you can compare the effects of market volatilities on ProShares UltraShort and Vulcan Value 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 Vulcan Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Vulcan Value.
Diversification Opportunities for ProShares UltraShort and Vulcan Value
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and Vulcan is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort Health and Vulcan Value Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Value Partners 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 Health are associated (or correlated) with Vulcan Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Value Partners has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Vulcan Value go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Vulcan Value
Considering the 90-day investment horizon ProShares UltraShort Health is expected to generate 1.56 times more return on investment than Vulcan Value. However, ProShares UltraShort is 1.56 times more volatile than Vulcan Value Partners. It trades about 0.2 of its potential returns per unit of risk. Vulcan Value Partners is currently generating about 0.0 per unit of risk. If you would invest 926.00 in ProShares UltraShort Health on September 12, 2024 and sell it today you would earn a total of 173.00 from holding ProShares UltraShort Health or generate 18.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
ProShares UltraShort Health vs. Vulcan Value Partners
Performance |
| Timeline |
| ProShares UltraShort |
| Vulcan Value Partners |
ProShares UltraShort and Vulcan Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Vulcan Value
The main advantage of trading using opposite ProShares UltraShort and Vulcan Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Vulcan Value 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 Vulcan Value will offset losses from the drop in Vulcan Value's long position.The idea behind ProShares UltraShort Health and Vulcan Value Partners 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.
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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 Stocks Directory module to find actively traded stocks across global markets.
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