Correlation Between ProShares UltraShort and Tuttle Capital

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

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

Diversification Opportunities for ProShares UltraShort and Tuttle Capital

-0.36

Correlation Coefficient

ProShares UltraShort  Tuttle Capital

Very good diversification

The 3 months correlation between ProShares and Tuttle is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort MSCI and Tuttle Capital Daily in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tuttle Capital Daily and ProShares UltraShort 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 UltraShort MSCI are associated (or correlated) with Tuttle Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tuttle Capital Daily has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Tuttle Capital go up and down completely randomly.

Pair Corralation between ProShares UltraShort and Tuttle Capital

Considering the 90-day investment horizon ProShares UltraShort MSCI is expected to generate 0.54 times more return on investment than Tuttle Capital. However, ProShares UltraShort MSCI is 1.86 times less risky than Tuttle Capital. It trades about -0.03 of its potential returns per unit of risk. Tuttle Capital Daily is currently generating about -0.14 per unit of risk. If you would invest  1,751  in ProShares UltraShort MSCI on September 12, 2024 and sell it today you would lose (108.00) from holding ProShares UltraShort MSCI or give up 6.17% of portfolio value over 90 days.

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

ProShares UltraShort MSCI  vs.  Tuttle Capital Daily

ProShares UltraShort MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares UltraShort MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, ProShares UltraShort is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Tuttle Capital Daily

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tuttle Capital Daily 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 basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with ProShares UltraShort and Tuttle Capital

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

The idea behind ProShares UltraShort MSCI and Tuttle Capital Daily 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.