Correlation Between ProShares Short and AXS TSLA

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

By analyzing existing cross correlation between ProShares Short MSCI and AXS TSLA Bear, you can compare the effects of market volatilities on ProShares Short and AXS TSLA 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 AXS TSLA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Short and AXS TSLA.

Diversification Opportunities for ProShares Short and AXS TSLA

0.01

Correlation Coefficient

ProShares Short  AXS TSLA

Significant diversification

The 3 months correlation between ProShares and AXS is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Short MSCI and AXS TSLA Bear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXS TSLA Bear 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 MSCI are associated (or correlated) with AXS TSLA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXS TSLA Bear has no effect on the direction of ProShares Short i.e., ProShares Short and AXS TSLA go up and down completely randomly.

Pair Corralation between ProShares Short and AXS TSLA

Considering the 90-day investment horizon ProShares Short is expected to generate 202.05 times less return on investment than AXS TSLA. But when comparing it to its historical volatility, ProShares Short MSCI is 56.29 times less risky than AXS TSLA. It trades about 0.03 of its potential returns per unit of risk. AXS TSLA Bear is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,922  in AXS TSLA Bear on August 30, 2024 and sell it today you would earn a total of  1,716  from holding AXS TSLA Bear or generate 58.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

ProShares Short MSCI  vs.  AXS TSLA Bear

ProShares Short MSCI

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Short MSCI are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, ProShares Short is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

AXS TSLA Bear

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AXS TSLA Bear are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain essential indicators, AXS TSLA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares Short and AXS TSLA

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

The idea behind ProShares Short MSCI and AXS TSLA Bear 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..