Correlation Between ProShares UltraShort and Pacer Trendpilot
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Pacer Trendpilot 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 Pacer Trendpilot 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 Pacer Trendpilot European, you can compare the effects of market volatilities on ProShares UltraShort and Pacer Trendpilot 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 Pacer Trendpilot. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Pacer Trendpilot.
Diversification Opportunities for ProShares UltraShort and Pacer Trendpilot
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and Pacer is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort 20 and Pacer Trendpilot European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Trendpilot European 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 Pacer Trendpilot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Trendpilot European has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Pacer Trendpilot go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Pacer Trendpilot
Considering the 90-day investment horizon ProShares UltraShort 20 is expected to generate 2.26 times more return on investment than Pacer Trendpilot. However, ProShares UltraShort is 2.26 times more volatile than Pacer Trendpilot European. It trades about -0.06 of its potential returns per unit of risk. Pacer Trendpilot European is currently generating about -0.2 per unit of risk. If you would invest 3,361 in ProShares UltraShort 20 on September 1, 2024 and sell it today you would lose (119.00) from holding ProShares UltraShort 20 or give up 3.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
ProShares UltraShort 20 vs. Pacer Trendpilot European
Performance |
| Timeline |
| ProShares UltraShort |
| Pacer Trendpilot European |
ProShares UltraShort and Pacer Trendpilot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Pacer Trendpilot
The main advantage of trading using opposite ProShares UltraShort and Pacer Trendpilot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Pacer Trendpilot 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 Pacer Trendpilot will offset losses from the drop in Pacer Trendpilot's long position.| ProShares UltraShort vs. Direxion Daily 20 | ProShares UltraShort vs. ProShares Short 20 | ProShares UltraShort vs. ProShares UltraShort 7 10 | ProShares UltraShort vs. Direxion Daily 7 10 |
| Pacer Trendpilot vs. Pacer Trendpilot Mid | Pacer Trendpilot vs. Pacer Trendpilot Large | Pacer Trendpilot vs. Pacer Trendpilot 100 | Pacer Trendpilot vs. Pacer Trendpilot International |
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 Stocks Directory module to find actively traded stocks across global markets.
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