Correlation Between ProShares UltraShort and ProShares Short
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and ProShares Short 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 ProShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraShort SmallCap600 and ProShares Short Financials, you can compare the effects of market volatilities on ProShares UltraShort and ProShares Short 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 ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and ProShares Short.
Diversification Opportunities for ProShares UltraShort and ProShares Short
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ProShares and ProShares is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort SmallCap6 and ProShares Short Financials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short Fina 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 SmallCap600 are associated (or correlated) with ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short Fina has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and ProShares Short go up and down completely randomly.
Pair Corralation between ProShares UltraShort and ProShares Short
Considering the 90-day investment horizon ProShares UltraShort SmallCap600 is expected to under-perform the ProShares Short. In addition to that, ProShares UltraShort is 3.11 times more volatile than ProShares Short Financials. It trades about -0.17 of its total potential returns per unit of risk. ProShares Short Financials is currently generating about -0.31 per unit of volatility. If you would invest 1,060 in ProShares Short Financials on December 30, 2023 and sell it today you would lose (42.00) from holding ProShares Short Financials or give up 3.96% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
ProShares UltraShort SmallCap6 vs. ProShares Short Financials
Performance |
Timeline |
ProShares UltraShort |
ProShares Short Fina |
ProShares UltraShort and ProShares Short Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ProShares UltraShort and ProShares Short
The main advantage of trading using opposite ProShares UltraShort and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, ProShares Short 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 Short will offset losses from the drop in ProShares Short's long position.ProShares UltraShort vs. Dimensional ETF Trust | ProShares UltraShort vs. Vanguard Small Cap Index | ProShares UltraShort vs. First Trust Multi Manager | ProShares UltraShort vs. Vanguard SP Small Cap |
ProShares Short vs. Direxion Daily Regional | ProShares Short vs. IShares MSCI Europe | ProShares Short vs. Fidelity MSCI Financials | ProShares Short vs. Direxion Daily Financial |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
Global Correlations Find global opportunities by holding instruments from different markets | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |