Correlation Between Breakwave Dry and ProShares Supply

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

By analyzing existing cross correlation between Breakwave Dry Bulk and ProShares Supply Chain, you can compare the effects of market volatilities on Breakwave Dry and ProShares Supply 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 Breakwave Dry with a short position of ProShares Supply. Check out your portfolio center. Please also check ongoing floating volatility patterns of Breakwave Dry and ProShares Supply.

Diversification Opportunities for Breakwave Dry and ProShares Supply

0.31

Correlation Coefficient

Breakwave Dry  ProShares Supply

Weak diversification

The 3 months correlation between Breakwave and ProShares is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Breakwave Dry Bulk and ProShares Supply Chain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Supply Chain and Breakwave Dry 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 Breakwave Dry Bulk are associated (or correlated) with ProShares Supply. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Supply Chain has no effect on the direction of Breakwave Dry i.e., Breakwave Dry and ProShares Supply go up and down completely randomly.

Pair Corralation between Breakwave Dry and ProShares Supply

Given the investment horizon of 90 days Breakwave Dry Bulk is expected to under-perform the ProShares Supply. In addition to that, Breakwave Dry is 3.85 times more volatile than ProShares Supply Chain. It trades about -0.01 of its total potential returns per unit of risk. ProShares Supply Chain is currently generating about 0.03 per unit of volatility. If you would invest  3,309  in ProShares Supply Chain on October 7, 2024 and sell it today you would earn a total of  489.00  from holding ProShares Supply Chain or generate 14.78% return on investment over 90 days.

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

Breakwave Dry Bulk  vs.  ProShares Supply Chain

Breakwave Dry Bulk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Breakwave Dry Bulk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

ProShares Supply Chain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Supply Chain has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, ProShares Supply is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Breakwave Dry and ProShares Supply

The main advantage of trading using opposite Breakwave Dry and ProShares Supply positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Breakwave Dry position performs unexpectedly, ProShares Supply 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 Supply will offset losses from the drop in ProShares Supply's long position.

The idea behind Breakwave Dry Bulk and ProShares Supply Chain 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.