Correlation Between DB Gold and ProShares UltraShort

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

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

Diversification Opportunities for DB Gold and ProShares UltraShort

0.93

Correlation Coefficient

DB Gold  ProShares UltraShort

Almost no diversification

The 3 months correlation between DGZ and ProShares is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding DB Gold Short and ProShares UltraShort Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort Gold and DB Gold 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 DB Gold 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 Gold has no effect on the direction of DB Gold i.e., DB Gold and ProShares UltraShort go up and down completely randomly.

Pair Corralation between DB Gold and ProShares UltraShort

Considering the 90-day investment horizon DB Gold Short is expected to generate 0.95 times more return on investment than ProShares UltraShort. However, DB Gold Short is 1.06 times less risky than ProShares UltraShort. It trades about -0.12 of its potential returns per unit of risk. ProShares UltraShort Gold is currently generating about -0.28 per unit of risk. If you would invest  848.00  in DB Gold Short on December 28, 2024 and sell it today you would lose (103.00) from holding DB Gold Short or give up 12.15% of portfolio value over 90 days.

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

DB Gold Short  vs.  ProShares UltraShort Gold

DB Gold Short

Risk-Adjusted Performance

Very Weak

Over the last 90 days DB Gold Short has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

ProShares UltraShort Gold

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares UltraShort Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Etf's essential indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the ETF venture institutional investors.

Pair Trading with DB Gold and ProShares UltraShort

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

The idea behind DB Gold Short and ProShares UltraShort Gold 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.