Correlation Between ProShares Short and Dimensional International
Can any of the company-specific risk be diversified away by investing in both ProShares Short and Dimensional International 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 Dimensional International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Short SP500 and Dimensional International High, you can compare the effects of market volatilities on ProShares Short and Dimensional International 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 Dimensional International. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Short and Dimensional International.
Diversification Opportunities for ProShares Short and Dimensional International
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ProShares and Dimensional is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Short SP500 and Dimensional International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional International 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 SP500 are associated (or correlated) with Dimensional International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional International has no effect on the direction of ProShares Short i.e., ProShares Short and Dimensional International go up and down completely randomly.
Pair Corralation between ProShares Short and Dimensional International
Allowing for the 90-day total investment horizon ProShares Short SP500 is expected to under-perform the Dimensional International. But the etf apears to be less risky and, when comparing its historical volatility, ProShares Short SP500 is 1.05 times less risky than Dimensional International. The etf trades about -0.09 of its potential returns per unit of risk. The Dimensional International High is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,544 in Dimensional International High on August 29, 2024 and sell it today you would earn a total of 28.00 from holding Dimensional International High or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Short SP500 vs. Dimensional International High
Performance |
| Timeline |
| ProShares Short SP500 |
| Dimensional International |
ProShares Short and Dimensional International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Short and Dimensional International
The main advantage of trading using opposite ProShares Short and Dimensional International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Short position performs unexpectedly, Dimensional International 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 Dimensional International will offset losses from the drop in Dimensional International's long position.| ProShares Short vs. ProShares Short QQQ | ProShares Short vs. ProShares Short Dow30 | ProShares Short vs. ProShares UltraShort SP500 | ProShares Short vs. ProShares Short Russell2000 |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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