Correlation Between PROSHARES ULTRASHORT and Caterpillar
Can any of the company-specific risk be diversified away by investing in both PROSHARES ULTRASHORT and Caterpillar 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 Caterpillar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PROSHARES ULTRASHORT RUSSELL and Caterpillar, you can compare the effects of market volatilities on PROSHARES ULTRASHORT and Caterpillar 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 Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of PROSHARES ULTRASHORT and Caterpillar.
Diversification Opportunities for PROSHARES ULTRASHORT and Caterpillar
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PROSHARES and Caterpillar is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding PROSHARES ULTRASHORT RUSSELL and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar 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 RUSSELL are associated (or correlated) with Caterpillar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caterpillar has no effect on the direction of PROSHARES ULTRASHORT i.e., PROSHARES ULTRASHORT and Caterpillar go up and down completely randomly.
Pair Corralation between PROSHARES ULTRASHORT and Caterpillar
Considering the 90-day investment horizon PROSHARES ULTRASHORT RUSSELL is expected to under-perform the Caterpillar. In addition to that, PROSHARES ULTRASHORT is 21.09 times more volatile than Caterpillar. It trades about -0.13 of its total potential returns per unit of risk. Caterpillar is currently generating about -0.07 per unit of volatility. If you would invest 39,654 in Caterpillar on September 12, 2024 and sell it today you would lose (767.00) from holding Caterpillar or give up 1.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
PROSHARES ULTRASHORT RUSSELL vs. Caterpillar
Performance |
| Timeline |
| PROSHARES ULTRASHORT |
| Caterpillar |
PROSHARES ULTRASHORT and Caterpillar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PROSHARES ULTRASHORT and Caterpillar
The main advantage of trading using opposite PROSHARES ULTRASHORT and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PROSHARES ULTRASHORT position performs unexpectedly, Caterpillar 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 Caterpillar will offset losses from the drop in Caterpillar's long position.| PROSHARES ULTRASHORT vs. Jacobs Solutions | PROSHARES ULTRASHORT vs. Dycom Industries | PROSHARES ULTRASHORT vs. Innovate Corp | PROSHARES ULTRASHORT vs. Energy Services |
| Caterpillar vs. Victory Integrity Smallmid Cap | Caterpillar vs. Hilton Worldwide Holdings | Caterpillar vs. NVIDIA | Caterpillar vs. JPMorgan Chase Co |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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