Correlation Between ProShares UltraShort and NKEQ
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and NKEQ 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 NKEQ 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 NKEQ, you can compare the effects of market volatilities on ProShares UltraShort and NKEQ 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 NKEQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and NKEQ.
Diversification Opportunities for ProShares UltraShort and NKEQ
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and NKEQ is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort SP500 and NKEQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NKEQ 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 NKEQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NKEQ has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and NKEQ go up and down completely randomly.
Pair Corralation between ProShares UltraShort and NKEQ
If you would invest 2,895 in NKEQ on September 12, 2024 and sell it today you would earn a total of 0.00 from holding NKEQ or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 2.44% |
| Values | Daily Returns |
ProShares UltraShort SP500 vs. NKEQ
Performance |
| Timeline |
| ProShares UltraShort |
| NKEQ |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
ProShares UltraShort and NKEQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and NKEQ
The main advantage of trading using opposite ProShares UltraShort and NKEQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, NKEQ 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 NKEQ will offset losses from the drop in NKEQ's long position.The idea behind ProShares UltraShort SP500 and NKEQ 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.
| NKEQ vs. ProShares UltraShort MSCI | NKEQ vs. ProShares UltraShort MSCI | NKEQ vs. ProShares UltraShort Euro | NKEQ vs. ProShares UltraShort MSCI |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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