Correlation Between ProShares Short and ProShares Short
Can any of the company-specific risk be diversified away by investing in both ProShares Short and ProShares Short 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 ProShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Short 20 and ProShares Short High, you can compare the effects of market volatilities on ProShares Short and ProShares Short 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 ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Short and ProShares Short.
Diversification Opportunities for ProShares Short and ProShares Short
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ProShares and ProShares is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Short 20 and ProShares Short High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short High 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 20 are associated (or correlated) with ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short High has no effect on the direction of ProShares Short i.e., ProShares Short and ProShares Short go up and down completely randomly.
Pair Corralation between ProShares Short and ProShares Short
Considering the 90-day investment horizon ProShares Short 20 is expected to generate 2.56 times more return on investment than ProShares Short. However, ProShares Short is 2.56 times more volatile than ProShares Short High. It trades about 0.04 of its potential returns per unit of risk. ProShares Short High is currently generating about -0.03 per unit of risk. If you would invest 1,972 in ProShares Short 20 on August 26, 2024 and sell it today you would earn a total of 436.00 from holding ProShares Short 20 or generate 22.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Short 20 vs. ProShares Short High
Performance |
| Timeline |
| ProShares Short 20 |
| ProShares Short High |
ProShares Short and ProShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Short and ProShares Short
The main advantage of trading using opposite ProShares Short and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Short position performs unexpectedly, ProShares Short 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 ProShares Short will offset losses from the drop in ProShares Short's long position.The idea behind ProShares Short 20 and ProShares Short High 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.| ProShares Short vs. Direxion Daily 20 | ProShares Short vs. Direxion Daily 7 10 | ProShares Short vs. ProShares Short 20 |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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