Correlation Between ProShares UltraShort and Schwab Fundamental
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Schwab Fundamental 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 Schwab Fundamental 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 Schwab Fundamental Small, you can compare the effects of market volatilities on ProShares UltraShort and Schwab Fundamental 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 Schwab Fundamental. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Schwab Fundamental.
Diversification Opportunities for ProShares UltraShort and Schwab Fundamental
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and Schwab is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort 20 and Schwab Fundamental Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Fundamental Small 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 Schwab Fundamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Fundamental Small has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Schwab Fundamental go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Schwab Fundamental
Considering the 90-day investment horizon ProShares UltraShort 20 is expected to under-perform the Schwab Fundamental. In addition to that, ProShares UltraShort is 1.6 times more volatile than Schwab Fundamental Small. It trades about 0.0 of its total potential returns per unit of risk. Schwab Fundamental Small is currently generating about 0.17 per unit of volatility. If you would invest 2,957 in Schwab Fundamental Small on November 3, 2024 and sell it today you would earn a total of 91.00 from holding Schwab Fundamental Small or generate 3.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
ProShares UltraShort 20 vs. Schwab Fundamental Small
Performance |
| Timeline |
| ProShares UltraShort |
| Schwab Fundamental Small |
ProShares UltraShort and Schwab Fundamental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Schwab Fundamental
The main advantage of trading using opposite ProShares UltraShort and Schwab Fundamental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Schwab Fundamental 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 Schwab Fundamental will offset losses from the drop in Schwab Fundamental'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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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