Correlation Between ProShares UltraShort and Roundhill Investments
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Roundhill Investments 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 Roundhill Investments 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 Roundhill Investments, you can compare the effects of market volatilities on ProShares UltraShort and Roundhill Investments 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 Roundhill Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Roundhill Investments.
Diversification Opportunities for ProShares UltraShort and Roundhill Investments
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and Roundhill is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort 20 and Roundhill Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roundhill Investments 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 Roundhill Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roundhill Investments has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Roundhill Investments go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Roundhill Investments
Considering the 90-day investment horizon ProShares UltraShort 20 is expected to generate 0.84 times more return on investment than Roundhill Investments. However, ProShares UltraShort 20 is 1.19 times less risky than Roundhill Investments. It trades about 0.13 of its potential returns per unit of risk. Roundhill Investments is currently generating about -0.04 per unit of risk. If you would invest 2,940 in ProShares UltraShort 20 on November 2, 2024 and sell it today you would earn a total of 677.00 from holding ProShares UltraShort 20 or generate 23.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 61.54% |
| Values | Daily Returns |
ProShares UltraShort 20 vs. Roundhill Investments
Performance |
| Timeline |
| ProShares UltraShort |
| Roundhill Investments |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
ProShares UltraShort and Roundhill Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Roundhill Investments
The main advantage of trading using opposite ProShares UltraShort and Roundhill Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Roundhill Investments 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 Roundhill Investments will offset losses from the drop in Roundhill Investments' 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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