Correlation Between ETRACS Quarterly and ProShares Short

Can any of the company-specific risk be diversified away by investing in both ETRACS Quarterly 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 ETRACS Quarterly and ProShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ETRACS Quarterly Pay and ProShares Short MSCI, you can compare the effects of market volatilities on ETRACS Quarterly 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 ETRACS Quarterly with a short position of ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS Quarterly and ProShares Short.

Diversification Opportunities for ETRACS Quarterly and ProShares Short

-0.58

Correlation Coefficient

ETRACS Quarterly  ProShares Short

Excellent diversification

The 3 months correlation between ETRACS and ProShares is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS Quarterly Pay and ProShares Short MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short MSCI and ETRACS Quarterly 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 ETRACS Quarterly Pay 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 MSCI has no effect on the direction of ETRACS Quarterly i.e., ETRACS Quarterly and ProShares Short go up and down completely randomly.

Pair Corralation between ETRACS Quarterly and ProShares Short

Given the investment horizon of 90 days ETRACS Quarterly Pay is expected to generate 1.7 times more return on investment than ProShares Short. However, ETRACS Quarterly is 1.7 times more volatile than ProShares Short MSCI. It trades about 0.11 of its potential returns per unit of risk. ProShares Short MSCI is currently generating about -0.49 per unit of risk. If you would invest  5,605  in ETRACS Quarterly Pay on February 21, 2024 and sell it today you would earn a total of  166.00  from holding ETRACS Quarterly Pay or generate 2.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ETRACS Quarterly Pay  vs.  ProShares Short MSCI

ETRACS Quarterly Pay

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ETRACS Quarterly Pay are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, ETRACS Quarterly may actually be approaching a critical reversion point that can send shares even higher in June 2024.

ProShares Short MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Short MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with ETRACS Quarterly and ProShares Short

The main advantage of trading using opposite ETRACS Quarterly and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS Quarterly 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.

The idea behind ETRACS Quarterly Pay and ProShares Short MSCI 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.