Correlation Between ProShares UltraShort and SPDR Morgan
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and SPDR Morgan 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 Morgan 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 Morgan Stanley, you can compare the effects of market volatilities on ProShares UltraShort and SPDR Morgan 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 Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and SPDR Morgan.
Diversification Opportunities for ProShares UltraShort and SPDR Morgan
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and SPDR is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort 20 and SPDR Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Morgan Stanley 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 Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Morgan Stanley has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and SPDR Morgan go up and down completely randomly.
Pair Corralation between ProShares UltraShort and SPDR Morgan
Considering the 90-day investment horizon ProShares UltraShort 20 is expected to under-perform the SPDR Morgan. In addition to that, ProShares UltraShort is 1.87 times more volatile than SPDR Morgan Stanley. It trades about -0.04 of its total potential returns per unit of risk. SPDR Morgan Stanley is currently generating about 0.03 per unit of volatility. If you would invest 20,249 in SPDR Morgan Stanley on August 30, 2024 and sell it today you would earn a total of 135.00 from holding SPDR Morgan Stanley or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
ProShares UltraShort 20 vs. SPDR Morgan Stanley
Performance |
| Timeline |
| ProShares UltraShort |
| SPDR Morgan Stanley |
ProShares UltraShort and SPDR Morgan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and SPDR Morgan
The main advantage of trading using opposite ProShares UltraShort and SPDR Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, SPDR Morgan 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 Morgan will offset losses from the drop in SPDR Morgan'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 Morgan vs. SPDR FactSet Innovative | SPDR Morgan vs. SPDR SP Software | SPDR Morgan vs. SPDR SP Health | SPDR Morgan vs. iShares Expanded Tech |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Stocks Directory Find actively traded stocks across global markets |