Correlation Between ProShares Trust and KBUY

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

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

Diversification Opportunities for ProShares Trust and KBUY

0.71

Correlation Coefficient

ProShares Trust  KBUY

Poor diversification

The 3 months correlation between ProShares and KBUY is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and KBUY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBUY and ProShares Trust 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 Trust are associated (or correlated) with KBUY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBUY has no effect on the direction of ProShares Trust i.e., ProShares Trust and KBUY go up and down completely randomly.

Pair Corralation between ProShares Trust and KBUY

Given the investment horizon of 90 days ProShares Trust is expected to under-perform the KBUY. In addition to that, ProShares Trust is 2.36 times more volatile than KBUY. It trades about -0.11 of its total potential returns per unit of risk. KBUY is currently generating about -0.04 per unit of volatility. If you would invest  1,905  in KBUY on September 21, 2024 and sell it today you would lose (177.00) from holding KBUY or give up 9.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	28.28%
Values	Daily Returns

ProShares Trust   vs.  KBUY

ProShares Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

KBUY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KBUY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, KBUY is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ProShares Trust and KBUY

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

The idea behind ProShares Trust and KBUY 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.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.