Correlation Between SPDR DoubleLine and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both SPDR DoubleLine 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 SPDR DoubleLine and ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR DoubleLine Short and ProShares UltraShort Russell2000, you can compare the effects of market volatilities on SPDR DoubleLine 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 SPDR DoubleLine with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR DoubleLine and ProShares UltraShort.
Diversification Opportunities for SPDR DoubleLine and ProShares UltraShort
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SPDR and ProShares is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding SPDR DoubleLine Short and ProShares UltraShort Russell20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort and SPDR DoubleLine 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 SPDR DoubleLine Short 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 has no effect on the direction of SPDR DoubleLine i.e., SPDR DoubleLine and ProShares UltraShort go up and down completely randomly.
Pair Corralation between SPDR DoubleLine and ProShares UltraShort
Given the investment horizon of 90 days SPDR DoubleLine Short is expected to under-perform the ProShares UltraShort. But the etf apears to be less risky and, when comparing its historical volatility, SPDR DoubleLine Short is 25.72 times less risky than ProShares UltraShort. The etf trades about -0.07 of its potential returns per unit of risk. The ProShares UltraShort Russell2000 is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,097 in ProShares UltraShort Russell2000 on January 24, 2024 and sell it today you would earn a total of 81.00 from holding ProShares UltraShort Russell2000 or generate 7.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
SPDR DoubleLine Short vs. ProShares UltraShort Russell20
Performance |
| Timeline |
| SPDR DoubleLine Short |
| ProShares UltraShort |
SPDR DoubleLine and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR DoubleLine and ProShares UltraShort
The main advantage of trading using opposite SPDR DoubleLine and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR DoubleLine 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.| SPDR DoubleLine vs. SPDR DoubleLine Emerging | SPDR DoubleLine vs. SPDR SSgA Ultra | SPDR DoubleLine vs. SPDR Bloomberg 1 10 | SPDR DoubleLine vs. SPDR DoubleLine Total |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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