Correlation Between AdvisorShares Dorsey and ProShares UltraShort

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

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

Diversification Opportunities for AdvisorShares Dorsey and ProShares UltraShort

-0.34

Correlation Coefficient

AdvisorShares Dorsey  ProShares UltraShort

Very good diversification

The 3 months correlation between AdvisorShares and ProShares is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares Dorsey Wright and ProShares UltraShort Euro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort Euro and AdvisorShares Dorsey 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 AdvisorShares Dorsey Wright 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 Euro has no effect on the direction of AdvisorShares Dorsey i.e., AdvisorShares Dorsey and ProShares UltraShort go up and down completely randomly.

Pair Corralation between AdvisorShares Dorsey and ProShares UltraShort

Given the investment horizon of 90 days AdvisorShares Dorsey is expected to generate 9.19 times less return on investment than ProShares UltraShort. In addition to that, AdvisorShares Dorsey is 1.26 times more volatile than ProShares UltraShort Euro. It trades about 0.02 of its total potential returns per unit of risk. ProShares UltraShort Euro is currently generating about 0.24 per unit of volatility. If you would invest  2,969  in ProShares UltraShort Euro on September 19, 2024 and sell it today you would earn a total of  435.00  from holding ProShares UltraShort Euro or generate 14.65% return on investment over 90 days.

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

AdvisorShares Dorsey Wright  vs.  ProShares UltraShort Euro

AdvisorShares Dorsey

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AdvisorShares Dorsey Wright are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, AdvisorShares Dorsey is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

ProShares UltraShort Euro

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares UltraShort Euro are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, ProShares UltraShort displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AdvisorShares Dorsey and ProShares UltraShort

The main advantage of trading using opposite AdvisorShares Dorsey and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdvisorShares Dorsey 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 AdvisorShares Dorsey Wright and ProShares UltraShort Euro 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.