Correlation Between ProShares UltraShort and Cambria Global
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Cambria Global 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 Cambria Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraShort SP500 and Cambria Global Tail, you can compare the effects of market volatilities on ProShares UltraShort and Cambria Global 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 Cambria Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Cambria Global.
Diversification Opportunities for ProShares UltraShort and Cambria Global
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and Cambria is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort SP500 and Cambria Global Tail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Global Tail 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 SP500 are associated (or correlated) with Cambria Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Global Tail has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Cambria Global go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Cambria Global
Considering the 90-day investment horizon ProShares UltraShort SP500 is expected to under-perform the Cambria Global. In addition to that, ProShares UltraShort is 2.93 times more volatile than Cambria Global Tail. It trades about -0.1 of its total potential returns per unit of risk. Cambria Global Tail is currently generating about 0.01 per unit of volatility. If you would invest 1,625 in Cambria Global Tail on August 30, 2024 and sell it today you would earn a total of 14.00 from holding Cambria Global Tail or generate 0.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraShort SP500 vs. Cambria Global Tail
Performance |
| Timeline |
| ProShares UltraShort |
| Cambria Global Tail |
ProShares UltraShort and Cambria Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Cambria Global
The main advantage of trading using opposite ProShares UltraShort and Cambria Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Cambria Global 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 Cambria Global will offset losses from the drop in Cambria Global's long position.| ProShares UltraShort vs. ProShares UltraShort QQQ | ProShares UltraShort vs. ProShares UltraShort Dow30 | ProShares UltraShort vs. ProShares Ultra SP500 | ProShares UltraShort vs. ProShares Short SP500 |
| Cambria Global vs. Cambria Tail Risk | Cambria Global vs. Cambria Trinity ETF | Cambria Global vs. Cambria Emerging Shareholder | Cambria Global vs. Cambria Global Momentum |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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