Correlation Between IPath Series and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both IPath Series and ProShares UltraShort 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 IPath Series and ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iPath Series B and ProShares UltraShort Yen, you can compare the effects of market volatilities on IPath Series and ProShares UltraShort 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 IPath Series with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPath Series and ProShares UltraShort.
Diversification Opportunities for IPath Series and ProShares UltraShort
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IPath and ProShares is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding iPath Series B and ProShares UltraShort Yen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort Yen and IPath Series 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 iPath Series B are associated (or correlated) with ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort Yen has no effect on the direction of IPath Series i.e., IPath Series and ProShares UltraShort go up and down completely randomly.
Pair Corralation between IPath Series and ProShares UltraShort
Considering the 90-day investment horizon iPath Series B is expected to under-perform the ProShares UltraShort. But the etf apears to be less risky and, when comparing its historical volatility, iPath Series B is 1.1 times less risky than ProShares UltraShort. The etf trades about -0.19 of its potential returns per unit of risk. The ProShares UltraShort Yen is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 4,466 in ProShares UltraShort Yen on August 30, 2024 and sell it today you would lose (106.00) from holding ProShares UltraShort Yen or give up 2.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iPath Series B vs. ProShares UltraShort Yen
Performance |
| Timeline |
| iPath Series B |
| ProShares UltraShort Yen |
IPath Series and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPath Series and ProShares UltraShort
The main advantage of trading using opposite IPath Series and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPath Series position performs unexpectedly, ProShares UltraShort 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 ProShares UltraShort will offset losses from the drop in ProShares UltraShort's long position.| IPath Series vs. ProShares VIX Mid Term | IPath Series vs. ProShares VIX Short Term | IPath Series vs. iPath Series B | IPath Series vs. ProShares Short Russell2000 |
| ProShares UltraShort vs. ProShares UltraShort Euro | ProShares UltraShort vs. ProShares Ultra Yen | ProShares UltraShort vs. ProShares Ultra Euro | ProShares UltraShort vs. ProShares UltraShort MSCI |
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.
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