Correlation Between ProShares UltraShort and Capital Group
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Capital Group 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 Capital Group 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 Capital Group Fixed, you can compare the effects of market volatilities on ProShares UltraShort and Capital Group 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 Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Capital Group.
Diversification Opportunities for ProShares UltraShort and Capital Group
-0.96 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and Capital is -0.96. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort Yen and Capital Group Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Fixed 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 Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Fixed has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Capital Group go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Capital Group
Considering the 90-day investment horizon ProShares UltraShort Yen is expected to generate 4.57 times more return on investment than Capital Group. However, ProShares UltraShort is 4.57 times more volatile than Capital Group Fixed. It trades about 0.02 of its potential returns per unit of risk. Capital Group Fixed is currently generating about 0.04 per unit of risk. If you would invest 4,453 in ProShares UltraShort Yen on August 28, 2024 and sell it today you would earn a total of 14.00 from holding ProShares UltraShort Yen or generate 0.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraShort Yen vs. Capital Group Fixed
Performance |
| Timeline |
| ProShares UltraShort Yen |
| Capital Group Fixed |
ProShares UltraShort and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Capital Group
The main advantage of trading using opposite ProShares UltraShort and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Capital Group 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 Capital Group will offset losses from the drop in Capital Group'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 |
| Capital Group vs. iShares MSCI EAFE | Capital Group vs. iShares iBoxx Investment | Capital Group vs. iShares TIPS Bond | Capital Group vs. iShares 1 3 Year |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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