Correlation Between ProShares UltraShort and Dimensional International
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort 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 UltraShort 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 UltraShort 20 and Dimensional International High, you can compare the effects of market volatilities on ProShares UltraShort 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 UltraShort with a short position of Dimensional International. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Dimensional International.
Diversification Opportunities for ProShares UltraShort and Dimensional International
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and Dimensional is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort 20 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 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 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 UltraShort i.e., ProShares UltraShort and Dimensional International go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Dimensional International
Considering the 90-day investment horizon ProShares UltraShort 20 is expected to generate 2.46 times more return on investment than Dimensional International. However, ProShares UltraShort is 2.46 times more volatile than Dimensional International High. It trades about 0.11 of its potential returns per unit of risk. Dimensional International High is currently generating about 0.02 per unit of risk. If you would invest 3,461 in ProShares UltraShort 20 on October 19, 2024 and sell it today you would earn a total of 239.00 from holding ProShares UltraShort 20 or generate 6.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraShort 20 vs. Dimensional International High
Performance |
| Timeline |
| ProShares UltraShort |
| Dimensional International |
ProShares UltraShort and Dimensional International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Dimensional International
The main advantage of trading using opposite ProShares UltraShort and Dimensional International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort 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 UltraShort vs. ProShares UltraShort 7 10 | ProShares UltraShort vs. ProShares UltraShort SP500 | ProShares UltraShort vs. iShares 20 Year | ProShares UltraShort vs. Direxion Daily 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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