Correlation Between Chia and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both Chia 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 Chia and ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chia and ProShares UltraShort FTSE, you can compare the effects of market volatilities on Chia 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 Chia with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia and ProShares UltraShort.
Diversification Opportunities for Chia and ProShares UltraShort
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chia and ProShares is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Chia and ProShares UltraShort FTSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort FTSE and Chia 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 Chia 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 FTSE has no effect on the direction of Chia i.e., Chia and ProShares UltraShort go up and down completely randomly.
Pair Corralation between Chia and ProShares UltraShort
Assuming the 90 days trading horizon Chia is expected to generate 5.67 times more return on investment than ProShares UltraShort. However, Chia is 5.67 times more volatile than ProShares UltraShort FTSE. It trades about 0.13 of its potential returns per unit of risk. ProShares UltraShort FTSE is currently generating about -0.19 per unit of risk. If you would invest 2,052 in Chia on October 21, 2024 and sell it today you would earn a total of 333.00 from holding Chia or generate 16.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Chia vs. ProShares UltraShort FTSE
Performance |
| Timeline |
| Chia |
| ProShares UltraShort FTSE |
Chia and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chia and ProShares UltraShort
The main advantage of trading using opposite Chia and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chia 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.The idea behind Chia and ProShares UltraShort FTSE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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