Correlation Between ProShares UltraShort and SPDR STOXX
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and SPDR STOXX 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 SPDR STOXX 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 SPDR STOXX Europe, you can compare the effects of market volatilities on ProShares UltraShort and SPDR STOXX 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 SPDR STOXX. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and SPDR STOXX.
Diversification Opportunities for ProShares UltraShort and SPDR STOXX
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and SPDR is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort 20 and SPDR STOXX Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR STOXX Europe 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 SPDR STOXX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR STOXX Europe has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and SPDR STOXX go up and down completely randomly.
Pair Corralation between ProShares UltraShort and SPDR STOXX
Considering the 90-day investment horizon ProShares UltraShort 20 is expected to generate 2.36 times more return on investment than SPDR STOXX. However, ProShares UltraShort is 2.36 times more volatile than SPDR STOXX Europe. It trades about 0.04 of its potential returns per unit of risk. SPDR STOXX Europe is currently generating about 0.03 per unit of risk. If you would invest 2,660 in ProShares UltraShort 20 on August 24, 2024 and sell it today you would earn a total of 835.00 from holding ProShares UltraShort 20 or generate 31.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraShort 20 vs. SPDR STOXX Europe
Performance |
| Timeline |
| ProShares UltraShort |
| SPDR STOXX Europe |
ProShares UltraShort and SPDR STOXX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and SPDR STOXX
The main advantage of trading using opposite ProShares UltraShort and SPDR STOXX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, SPDR STOXX 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 SPDR STOXX will offset losses from the drop in SPDR STOXX'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 |
| SPDR STOXX vs. SPDR Bloomberg Barclays | SPDR STOXX vs. SPDR Kensho Future | SPDR STOXX vs. SPDR Kensho Intelligent | SPDR STOXX vs. SPDR SP Kensho |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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