Correlation Between ProShares Investment and TrimTabs Donoghue

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

By analyzing existing cross correlation between ProShares Investment GradeInterest and TrimTabs Donoghue Forlines, you can compare the effects of market volatilities on ProShares Investment and TrimTabs Donoghue 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 Investment with a short position of TrimTabs Donoghue. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Investment and TrimTabs Donoghue.

Diversification Opportunities for ProShares Investment and TrimTabs Donoghue

-0.38

Correlation Coefficient

ProShares Investment  TrimTabs Donoghue

Very good diversification

The 3 months correlation between ProShares and TrimTabs is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Investment GradeInte and TrimTabs Donoghue Forlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrimTabs Donoghue and ProShares Investment 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 Investment GradeInterest are associated (or correlated) with TrimTabs Donoghue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrimTabs Donoghue has no effect on the direction of ProShares Investment i.e., ProShares Investment and TrimTabs Donoghue go up and down completely randomly.

Pair Corralation between ProShares Investment and TrimTabs Donoghue

Given the investment horizon of 90 days ProShares Investment GradeInterest is expected to generate 1.12 times more return on investment than TrimTabs Donoghue. However, ProShares Investment is 1.12 times more volatile than TrimTabs Donoghue Forlines. It trades about 0.31 of its potential returns per unit of risk. TrimTabs Donoghue Forlines is currently generating about 0.15 per unit of risk. If you would invest  7,718  in ProShares Investment GradeInterest on September 26, 2024 and sell it today you would earn a total of  100.00  from holding ProShares Investment GradeInterest or generate 1.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	66.67%
Values	Daily Returns

ProShares Investment GradeInte  vs.  TrimTabs Donoghue Forlines

ProShares Investment

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Investment GradeInterest are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, ProShares Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

TrimTabs Donoghue

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TrimTabs Donoghue Forlines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, TrimTabs Donoghue is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ProShares Investment and TrimTabs Donoghue

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

The idea behind ProShares Investment GradeInterest and TrimTabs Donoghue Forlines 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.