Correlation Between ProShares Short and ProShares Short

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

By analyzing existing cross correlation between ProShares Short Dow30 and ProShares Short MidCap400, you can compare the effects of market volatilities on ProShares Short 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 ProShares Short with a short position of ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Short and ProShares Short.

Diversification Opportunities for ProShares Short and ProShares Short

0.88

Correlation Coefficient

ProShares Short  ProShares Short

Very poor diversification

The 3 months correlation between ProShares and ProShares is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Short Dow30 and ProShares Short MidCap400 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short MidCap400 and ProShares Short 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 Short Dow30 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 MidCap400 has no effect on the direction of ProShares Short i.e., ProShares Short and ProShares Short go up and down completely randomly.

Pair Corralation between ProShares Short and ProShares Short

Considering the 90-day investment horizon ProShares Short is expected to generate 2.15 times less return on investment than ProShares Short. But when comparing it to its historical volatility, ProShares Short Dow30 is 1.2 times less risky than ProShares Short. It trades about 0.07 of its potential returns per unit of risk. ProShares Short MidCap400 is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,889  in ProShares Short MidCap400 on December 22, 2024 and sell it today you would earn a total of  142.00  from holding ProShares Short MidCap400 or generate 7.52% return on investment over 90 days.

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

ProShares Short Dow30  vs.  ProShares Short MidCap400

ProShares Short Dow30

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Short Dow30 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ProShares Short is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

ProShares Short MidCap400

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Short MidCap400 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, ProShares Short may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ProShares Short and ProShares Short

The main advantage of trading using opposite ProShares Short and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Short 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 ProShares Short Dow30 and ProShares Short MidCap400 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.