Correlation Between ProShares UltraShort and Simplify Exchange
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Simplify Exchange 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 Simplify Exchange 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 Simplify Exchange Traded, you can compare the effects of market volatilities on ProShares UltraShort and Simplify Exchange 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 Simplify Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Simplify Exchange.
Diversification Opportunities for ProShares UltraShort and Simplify Exchange
-0.96 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and Simplify is -0.96. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort 20 and Simplify Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Exchange Traded 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 Simplify Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Exchange Traded has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Simplify Exchange go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Simplify Exchange
Considering the 90-day investment horizon ProShares UltraShort 20 is expected to under-perform the Simplify Exchange. In addition to that, ProShares UltraShort is 4.36 times more volatile than Simplify Exchange Traded. It trades about -0.05 of its total potential returns per unit of risk. Simplify Exchange Traded is currently generating about -0.1 per unit of volatility. If you would invest 2,169 in Simplify Exchange Traded on August 29, 2024 and sell it today you would lose (26.00) from holding Simplify Exchange Traded or give up 1.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraShort 20 vs. Simplify Exchange Traded
Performance |
| Timeline |
| ProShares UltraShort |
| Simplify Exchange Traded |
ProShares UltraShort and Simplify Exchange Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Simplify Exchange
The main advantage of trading using opposite ProShares UltraShort and Simplify Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Simplify Exchange 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 Simplify Exchange will offset losses from the drop in Simplify Exchange'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 |
| Simplify Exchange vs. Global X Funds | Simplify Exchange vs. US Treasury 12 | Simplify Exchange vs. Tidal Trust II | Simplify Exchange vs. Franklin Liberty Treasury |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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