Correlation Between ProShares UltraShort and SPDR MSCI
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and SPDR MSCI 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 MSCI 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 MSCI EAFE, you can compare the effects of market volatilities on ProShares UltraShort and SPDR MSCI 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 MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and SPDR MSCI.
Diversification Opportunities for ProShares UltraShort and SPDR MSCI
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and SPDR is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort 20 and SPDR MSCI EAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR MSCI EAFE 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 MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR MSCI EAFE has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and SPDR MSCI go up and down completely randomly.
Pair Corralation between ProShares UltraShort and SPDR MSCI
Considering the 90-day investment horizon ProShares UltraShort 20 is expected to generate 2.83 times more return on investment than SPDR MSCI. However, ProShares UltraShort is 2.83 times more volatile than SPDR MSCI EAFE. It trades about -0.04 of its potential returns per unit of risk. SPDR MSCI EAFE is currently generating about -0.15 per unit of risk. If you would invest 3,389 in ProShares UltraShort 20 on August 30, 2024 and sell it today you would lose (89.00) from holding ProShares UltraShort 20 or give up 2.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraShort 20 vs. SPDR MSCI EAFE
Performance |
| Timeline |
| ProShares UltraShort |
| SPDR MSCI EAFE |
ProShares UltraShort and SPDR MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and SPDR MSCI
The main advantage of trading using opposite ProShares UltraShort and SPDR MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, SPDR MSCI 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 MSCI will offset losses from the drop in SPDR MSCI'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 MSCI vs. SPDR MSCI Emerging | SPDR MSCI vs. SPDR MSCI USA | SPDR MSCI vs. SPDR MSCI World | SPDR MSCI vs. SPDR SSGA Large |
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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