Correlation Between SCOM and ProShares UltraShort

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Can any of the company-specific risk be diversified away by investing in both SCOM and ProShares UltraShort 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 SCOM and ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOM and ProShares UltraShort QQQ, you can compare the effects of market volatilities on SCOM and ProShares UltraShort 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 SCOM with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOM and ProShares UltraShort.

Diversification Opportunities for SCOM and ProShares UltraShort

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between SCOM and ProShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SCOM and ProShares UltraShort QQQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort QQQ and SCOM 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 SCOM are associated (or correlated) with ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort QQQ has no effect on the direction of SCOM i.e., SCOM and ProShares UltraShort go up and down completely randomly.

Pair Corralation between SCOM and ProShares UltraShort

If you would invest (100.00) in SCOM on December 29, 2023 and sell it today you would earn a total of  100.00  from holding SCOM or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

SCOM  vs.  ProShares UltraShort QQQ

 Performance 
       Timeline  
SCOM 

Risk-Adjusted Performance

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Over the last 90 days SCOM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, SCOM is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
ProShares UltraShort QQQ 

Risk-Adjusted Performance

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High
Very Weak
Over the last 90 days ProShares UltraShort QQQ has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Etf's forward indicators remain rather sound which may send shares a bit higher in April 2024. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

SCOM and ProShares UltraShort Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SCOM and ProShares UltraShort

The main advantage of trading using opposite SCOM and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOM position performs unexpectedly, ProShares UltraShort 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 ProShares UltraShort will offset losses from the drop in ProShares UltraShort's long position.
The idea behind SCOM and ProShares UltraShort QQQ pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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