Correlation Between ProShares UltraShort and Avantis Core
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Avantis Core 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 Avantis Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraShort 20 and Avantis Core Fixed, you can compare the effects of market volatilities on ProShares UltraShort and Avantis Core 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 Avantis Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Avantis Core.
Diversification Opportunities for ProShares UltraShort and Avantis Core
-0.96 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and Avantis is -0.96. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort 20 and Avantis Core Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Core Fixed 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 20 are associated (or correlated) with Avantis Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Core Fixed has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Avantis Core go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Avantis Core
Considering the 90-day investment horizon ProShares UltraShort 20 is expected to generate 5.09 times more return on investment than Avantis Core. However, ProShares UltraShort is 5.09 times more volatile than Avantis Core Fixed. It trades about 0.03 of its potential returns per unit of risk. Avantis Core Fixed is currently generating about 0.05 per unit of risk. If you would invest 2,790 in ProShares UltraShort 20 on August 31, 2024 and sell it today you would earn a total of 472.00 from holding ProShares UltraShort 20 or generate 16.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
ProShares UltraShort 20 vs. Avantis Core Fixed
Performance |
| Timeline |
| ProShares UltraShort |
| Avantis Core Fixed |
ProShares UltraShort and Avantis Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Avantis Core
The main advantage of trading using opposite ProShares UltraShort and Avantis Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Avantis Core 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 Avantis Core will offset losses from the drop in Avantis Core's long position.| ProShares UltraShort vs. ProShares UltraShort 7 10 | ProShares UltraShort vs. ProShares UltraShort SP500 | ProShares UltraShort vs. iShares 20 Year | ProShares UltraShort vs. Direxion Daily 20 |
| Avantis Core vs. American Century ETF | Avantis Core vs. Avantis Core Municipal | Avantis Core vs. Avantis International Equity | Avantis Core vs. Avantis Emerging Markets |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |