Correlation Between IShares Future and ProShares Short

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

By analyzing existing cross correlation between iShares Future AI and ProShares Short 7 10, you can compare the effects of market volatilities on IShares Future 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 IShares Future with a short position of ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Future and ProShares Short.

Diversification Opportunities for IShares Future and ProShares Short

0.62

Correlation Coefficient

IShares Future  ProShares Short

Poor diversification

The 3 months correlation between IShares and ProShares is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding iShares Future AI and ProShares Short 7 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short 7 and IShares Future 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 iShares Future AI 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 7 has no effect on the direction of IShares Future i.e., IShares Future and ProShares Short go up and down completely randomly.

Pair Corralation between IShares Future and ProShares Short

Given the investment horizon of 90 days iShares Future AI is expected to generate 3.3 times more return on investment than ProShares Short. However, IShares Future is 3.3 times more volatile than ProShares Short 7 10. It trades about 0.15 of its potential returns per unit of risk. ProShares Short 7 10 is currently generating about 0.22 per unit of risk. If you would invest  3,403  in iShares Future AI on September 19, 2024 and sell it today you would earn a total of  465.00  from holding iShares Future AI or generate 13.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

iShares Future AI  vs.  ProShares Short 7 10

iShares Future AI

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Future AI are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, IShares Future showed solid returns over the last few months and may actually be approaching a breakup point.

ProShares Short 7

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Short 7 10 are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental drivers, ProShares Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares Future and ProShares Short

The main advantage of trading using opposite IShares Future and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Future 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 iShares Future AI and ProShares Short 7 10 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.