Correlation Between ProShares UltraShort and American Century
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and American Century 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 American Century 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 American Century Quality, you can compare the effects of market volatilities on ProShares UltraShort and American Century 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 American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and American Century.
Diversification Opportunities for ProShares UltraShort and American Century
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and American is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort Yen and American Century Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Quality 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 American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century Quality has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and American Century go up and down completely randomly.
Pair Corralation between ProShares UltraShort and American Century
Considering the 90-day investment horizon ProShares UltraShort Yen is expected to under-perform the American Century. In addition to that, ProShares UltraShort is 1.77 times more volatile than American Century Quality. It trades about -0.2 of its total potential returns per unit of risk. American Century Quality is currently generating about 0.41 per unit of volatility. If you would invest 4,776 in American Century Quality on November 2, 2024 and sell it today you would earn a total of 293.00 from holding American Century Quality or generate 6.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
ProShares UltraShort Yen vs. American Century Quality
Performance |
| Timeline |
| ProShares UltraShort Yen |
| American Century Quality |
ProShares UltraShort and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and American Century
The main advantage of trading using opposite ProShares UltraShort and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century'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 |
| American Century vs. American Century Quality | American Century vs. American Century STOXX | American Century vs. American Century Diversified | American Century vs. American Century Diversified |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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