Correlation Between AdvisorShares Ranger and ProShares Short

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

By analyzing existing cross correlation between AdvisorShares Ranger Equity and ProShares Short Russell2000, you can compare the effects of market volatilities on AdvisorShares Ranger 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 AdvisorShares Ranger with a short position of ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvisorShares Ranger and ProShares Short.

Diversification Opportunities for AdvisorShares Ranger and ProShares Short

0.91

Correlation Coefficient

AdvisorShares Ranger  ProShares Short

Almost no diversification

The 3 months correlation between AdvisorShares and ProShares is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares Ranger Equity and ProShares Short Russell2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short Russ and AdvisorShares Ranger 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 Ranger Equity 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 Russ has no effect on the direction of AdvisorShares Ranger i.e., AdvisorShares Ranger and ProShares Short go up and down completely randomly.

Pair Corralation between AdvisorShares Ranger and ProShares Short

Given the investment horizon of 90 days AdvisorShares Ranger Equity is expected to under-perform the ProShares Short. But the etf apears to be less risky and, when comparing its historical volatility, AdvisorShares Ranger Equity is 1.12 times less risky than ProShares Short. The etf trades about -0.18 of its potential returns per unit of risk. The ProShares Short Russell2000 is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  1,922  in ProShares Short Russell2000 on September 15, 2024 and sell it today you would lose (115.00) from holding ProShares Short Russell2000 or give up 5.98% of portfolio value over 90 days.

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

AdvisorShares Ranger Equity  vs.  ProShares Short Russell2000

AdvisorShares Ranger

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AdvisorShares Ranger Equity 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 sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

ProShares Short Russ

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Short Russell2000 has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with AdvisorShares Ranger and ProShares Short

The main advantage of trading using opposite AdvisorShares Ranger and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdvisorShares Ranger 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 AdvisorShares Ranger Equity and ProShares Short Russell2000 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.