Correlation Between ProShares UltraShort and ZBIO

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Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and ZBIO 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 ZBIO 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 ZBIO, you can compare the effects of market volatilities on ProShares UltraShort and ZBIO 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 ZBIO. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and ZBIO.

Diversification Opportunities for ProShares UltraShort and ZBIO

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between ProShares and ZBIO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort SmallCap6 and ZBIO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZBIO 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 ZBIO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZBIO has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and ZBIO go up and down completely randomly.

Pair Corralation between ProShares UltraShort and ZBIO

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

ProShares UltraShort SmallCap6  vs.  ZBIO

 Performance 
       Timeline  
ProShares UltraShort 

Risk-Adjusted Performance

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Over the last 90 days ProShares UltraShort SmallCap600 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, ProShares UltraShort is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.
ZBIO 

Risk-Adjusted Performance

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

ProShares UltraShort and ZBIO Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ProShares UltraShort and ZBIO

The main advantage of trading using opposite ProShares UltraShort and ZBIO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, ZBIO 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 ZBIO will offset losses from the drop in ZBIO's long position.
The idea behind ProShares UltraShort SmallCap600 and ZBIO 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.
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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