Correlation Between ProShares UltraShort and Fidelity Investment
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Fidelity Investment 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 Fidelity Investment 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 Fidelity Investment Grade, you can compare the effects of market volatilities on ProShares UltraShort and Fidelity Investment 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 Fidelity Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Fidelity Investment.
Diversification Opportunities for ProShares UltraShort and Fidelity Investment
-0.98 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and Fidelity is -0.98. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort 20 and Fidelity Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Investment Grade 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 Fidelity Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Investment Grade has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Fidelity Investment go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Fidelity Investment
Considering the 90-day investment horizon ProShares UltraShort 20 is expected to under-perform the Fidelity Investment. In addition to that, ProShares UltraShort is 6.36 times more volatile than Fidelity Investment Grade. It trades about -0.03 of its total potential returns per unit of risk. Fidelity Investment Grade is currently generating about 0.06 per unit of volatility. If you would invest 4,279 in Fidelity Investment Grade on August 29, 2024 and sell it today you would earn a total of 21.00 from holding Fidelity Investment Grade or generate 0.49% 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. Fidelity Investment Grade
Performance |
| Timeline |
| ProShares UltraShort |
| Fidelity Investment Grade |
ProShares UltraShort and Fidelity Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Fidelity Investment
The main advantage of trading using opposite ProShares UltraShort and Fidelity Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Fidelity Investment 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 Fidelity Investment will offset losses from the drop in Fidelity Investment'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 |
| Fidelity Investment vs. Fidelity Investment Grade | Fidelity Investment vs. Fidelity Corporate Bond | Fidelity Investment vs. Fidelity Limited Term | Fidelity Investment vs. Fidelity Covington Trust |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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