Correlation Between Alphabet and ProShares Short

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

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

Diversification Opportunities for Alphabet and ProShares Short

0.75

Correlation Coefficient

Alphabet  ProShares Short

Poor diversification

The 3 months correlation between Alphabet and ProShares is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and ProShares Short MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short MSCI and Alphabet 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 Alphabet Inc Class C 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 MSCI has no effect on the direction of Alphabet i.e., Alphabet and ProShares Short go up and down completely randomly.

Pair Corralation between Alphabet and ProShares Short

Given the investment horizon of 90 days Alphabet Inc Class C is expected to under-perform the ProShares Short. In addition to that, Alphabet is 2.15 times more volatile than ProShares Short MSCI. It trades about -0.12 of its total potential returns per unit of risk. ProShares Short MSCI is currently generating about -0.13 per unit of volatility. If you would invest  1,655  in ProShares Short MSCI on December 29, 2024 and sell it today you would lose (116.00) from holding ProShares Short MSCI or give up 7.01% of portfolio value over 90 days.

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

Alphabet Inc Class C  vs.  ProShares Short MSCI

Alphabet Class C

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alphabet Inc Class C has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ProShares Short MSCI

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Short MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Alphabet and ProShares Short

The main advantage of trading using opposite Alphabet and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet 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 Alphabet Inc Class C and ProShares Short MSCI 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.