Correlation Between ProShares High and Strategy Shares

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

By analyzing existing cross correlation between ProShares High YieldInterest and Strategy Shares , you can compare the effects of market volatilities on ProShares High and Strategy Shares 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 High with a short position of Strategy Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares High and Strategy Shares.

Diversification Opportunities for ProShares High and Strategy Shares

-0.68

Correlation Coefficient

ProShares High  Strategy Shares

Excellent diversification

The 3 months correlation between ProShares and Strategy is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding ProShares High YieldInterest and Strategy Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategy Shares and ProShares High 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 High YieldInterest are associated (or correlated) with Strategy Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategy Shares has no effect on the direction of ProShares High i.e., ProShares High and Strategy Shares go up and down completely randomly.

Pair Corralation between ProShares High and Strategy Shares

Given the investment horizon of 90 days ProShares High YieldInterest is expected to generate 0.42 times more return on investment than Strategy Shares. However, ProShares High YieldInterest is 2.4 times less risky than Strategy Shares. It trades about 0.01 of its potential returns per unit of risk. Strategy Shares is currently generating about -0.07 per unit of risk. If you would invest  6,545  in ProShares High YieldInterest on September 23, 2024 and sell it today you would earn a total of  3.00  from holding ProShares High YieldInterest or generate 0.05% return on investment over 90 days.

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

ProShares High YieldInterest  vs.  Strategy Shares

ProShares High Yield

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares High YieldInterest are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, ProShares High is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Strategy Shares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strategy Shares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Strategy Shares is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with ProShares High and Strategy Shares

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

The idea behind ProShares High YieldInterest and Strategy Shares 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.