Correlation Between ProShares UltraShort and Pacer Benchmark
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Pacer Benchmark 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 Pacer Benchmark 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 Pacer Benchmark Data, you can compare the effects of market volatilities on ProShares UltraShort and Pacer Benchmark 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 Pacer Benchmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Pacer Benchmark.
Diversification Opportunities for ProShares UltraShort and Pacer Benchmark
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and Pacer is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort Yen and Pacer Benchmark Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Benchmark Data 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 Pacer Benchmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Benchmark Data has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Pacer Benchmark go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Pacer Benchmark
Considering the 90-day investment horizon ProShares UltraShort Yen is expected to under-perform the Pacer Benchmark. But the etf apears to be less risky and, when comparing its historical volatility, ProShares UltraShort Yen is 1.06 times less risky than Pacer Benchmark. The etf trades about -0.05 of its potential returns per unit of risk. The Pacer Benchmark Data is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,965 in Pacer Benchmark Data on October 24, 2024 and sell it today you would earn a total of 102.00 from holding Pacer Benchmark Data or generate 3.44% 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. Pacer Benchmark Data
Performance |
| Timeline |
| ProShares UltraShort Yen |
| Pacer Benchmark Data |
ProShares UltraShort and Pacer Benchmark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Pacer Benchmark
The main advantage of trading using opposite ProShares UltraShort and Pacer Benchmark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Pacer Benchmark 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 Pacer Benchmark will offset losses from the drop in Pacer Benchmark'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 |
| Pacer Benchmark vs. Pacer Benchmark Industrial | Pacer Benchmark vs. First Trust NASDAQ | Pacer Benchmark vs. Global X Internet | Pacer Benchmark vs. ProShares Online Retail |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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