Correlation Between FT Cboe and ProShares Short

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

By analyzing existing cross correlation between FT Cboe Vest and ProShares Short SP500, you can compare the effects of market volatilities on FT Cboe 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 FT Cboe with a short position of ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Cboe and ProShares Short.

Diversification Opportunities for FT Cboe and ProShares Short

-0.98

Correlation Coefficient

FT Cboe  ProShares Short

Pay attention - limited upside

The 3 months correlation between DJUL and ProShares is -0.98. Overlapping area represents the amount of risk that can be diversified away by holding FT Cboe Vest and ProShares Short SP500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short SP500 and FT Cboe 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 FT Cboe Vest 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 SP500 has no effect on the direction of FT Cboe i.e., FT Cboe and ProShares Short go up and down completely randomly.

Pair Corralation between FT Cboe and ProShares Short

Given the investment horizon of 90 days FT Cboe Vest is expected to under-perform the ProShares Short. But the etf apears to be less risky and, when comparing its historical volatility, FT Cboe Vest is 1.56 times less risky than ProShares Short. The etf trades about -0.08 of its potential returns per unit of risk. The ProShares Short SP500 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  4,190  in ProShares Short SP500 on December 29, 2024 and sell it today you would earn a total of  292.00  from holding ProShares Short SP500 or generate 6.97% return on investment over 90 days.

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

FT Cboe Vest  vs.  ProShares Short SP500

FT Cboe Vest

Risk-Adjusted Performance

Very Weak

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

ProShares Short SP500

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Short SP500 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, ProShares Short may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with FT Cboe and ProShares Short

The main advantage of trading using opposite FT Cboe and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT Cboe 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 FT Cboe Vest and ProShares Short SP500 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.