Correlation Between ProShares UltraShort and SPDR Portfolio
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and SPDR Portfolio 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 Portfolio 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 Portfolio Europe, you can compare the effects of market volatilities on ProShares UltraShort and SPDR Portfolio 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 Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and SPDR Portfolio.
Diversification Opportunities for ProShares UltraShort and SPDR Portfolio
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between ProShares and SPDR is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort 20 and SPDR Portfolio Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio Europe 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 Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio Europe has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and SPDR Portfolio go up and down completely randomly.
Pair Corralation between ProShares UltraShort and SPDR Portfolio
Considering the 90-day investment horizon ProShares UltraShort 20 is expected to under-perform the SPDR Portfolio. In addition to that, ProShares UltraShort is 1.9 times more volatile than SPDR Portfolio Europe. It trades about -0.09 of its total potential returns per unit of risk. SPDR Portfolio Europe is currently generating about 0.19 per unit of volatility. If you would invest 4,236 in SPDR Portfolio Europe on November 27, 2024 and sell it today you would earn a total of 141.00 from holding SPDR Portfolio Europe or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraShort 20 vs. SPDR Portfolio Europe
Performance |
| Timeline |
| ProShares UltraShort |
| SPDR Portfolio Europe |
ProShares UltraShort and SPDR Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and SPDR Portfolio
The main advantage of trading using opposite ProShares UltraShort and SPDR Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, SPDR Portfolio 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 Portfolio will offset losses from the drop in SPDR Portfolio'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 Portfolio vs. Franklin FTSE Europe | SPDR Portfolio vs. SPDR Portfolio MSCI | SPDR Portfolio vs. iShares Core MSCI | SPDR Portfolio vs. JPMorgan BetaBuilders Europe |
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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