Correlation Between ProShares UltraShort and BNY Mellon
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and BNY Mellon 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 BNY Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraShort Yen and BNY Mellon International, you can compare the effects of market volatilities on ProShares UltraShort and BNY Mellon 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 BNY Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and BNY Mellon.
Diversification Opportunities for ProShares UltraShort and BNY Mellon
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and BNY is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort Yen and BNY Mellon International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon International 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 Yen are associated (or correlated) with BNY Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNY Mellon International has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and BNY Mellon go up and down completely randomly.
Pair Corralation between ProShares UltraShort and BNY Mellon
Considering the 90-day investment horizon ProShares UltraShort is expected to generate 1.1 times less return on investment than BNY Mellon. In addition to that, ProShares UltraShort is 1.74 times more volatile than BNY Mellon International. It trades about 0.05 of its total potential returns per unit of risk. BNY Mellon International is currently generating about 0.09 per unit of volatility. If you would invest 6,111 in BNY Mellon International on August 26, 2024 and sell it today you would earn a total of 1,304 from holding BNY Mellon International or generate 21.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraShort Yen vs. BNY Mellon International
Performance |
| Timeline |
| ProShares UltraShort Yen |
| BNY Mellon International |
ProShares UltraShort and BNY Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and BNY Mellon
The main advantage of trading using opposite ProShares UltraShort and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, BNY Mellon 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 BNY Mellon will offset losses from the drop in BNY Mellon's long position.| ProShares UltraShort vs. ProShares UltraShort Euro | ProShares UltraShort vs. ProShares Ultra Yen | ProShares UltraShort vs. ProShares Ultra Euro | ProShares UltraShort vs. ProShares UltraShort MSCI |
| BNY Mellon vs. Dimensional Core Equity | BNY Mellon vs. Dimensional Emerging Core | BNY Mellon vs. Dimensional Targeted Value | BNY Mellon vs. Dimensional Small Cap |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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