Correlation Between ProShares UltraShort and Vident Core
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Vident Core 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 Vident Core 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 Vident Core Equity, you can compare the effects of market volatilities on ProShares UltraShort and Vident Core 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 Vident Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Vident Core.
Diversification Opportunities for ProShares UltraShort and Vident Core
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and Vident is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort Yen and Vident Core Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vident Core Equity 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 Vident Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vident Core Equity has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Vident Core go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Vident Core
Considering the 90-day investment horizon ProShares UltraShort Yen is expected to generate 1.98 times more return on investment than Vident Core. However, ProShares UltraShort is 1.98 times more volatile than Vident Core Equity. It trades about 0.24 of its potential returns per unit of risk. Vident Core Equity is currently generating about 0.22 per unit of risk. If you would invest 3,805 in ProShares UltraShort Yen on August 28, 2024 and sell it today you would earn a total of 662.00 from holding ProShares UltraShort Yen or generate 17.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraShort Yen vs. Vident Core Equity
Performance |
| Timeline |
| ProShares UltraShort Yen |
| Vident Core Equity |
ProShares UltraShort and Vident Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Vident Core
The main advantage of trading using opposite ProShares UltraShort and Vident Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Vident Core 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 Vident Core will offset losses from the drop in Vident Core'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 |
| Vident Core vs. Vident International Equity | Vident Core vs. Vident Core Bond | Vident Core vs. VictoryShares 500 Enhanced | Vident Core vs. First Trust Eurozone |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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