Correlation Between IShares Expanded and UST Inc

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

By analyzing existing cross correlation between iShares Expanded Tech Software and ProShares Ultra 7 10, you can compare the effects of market volatilities on IShares Expanded and UST Inc 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 IShares Expanded with a short position of UST Inc. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Expanded and UST Inc.

Diversification Opportunities for IShares Expanded and UST Inc

0.64

Correlation Coefficient

IShares Expanded  UST Inc

Poor diversification

The 3 months correlation between IShares and UST is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding iShares Expanded Tech Software and ProShares Ultra 7 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra 7 and IShares Expanded 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 iShares Expanded Tech Software are associated (or correlated) with UST Inc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra 7 has no effect on the direction of IShares Expanded i.e., IShares Expanded and UST Inc go up and down completely randomly.

Pair Corralation between IShares Expanded and UST Inc

Considering the 90-day investment horizon iShares Expanded Tech Software is expected to under-perform the UST Inc. In addition to that, IShares Expanded is 1.86 times more volatile than ProShares Ultra 7 10. It trades about -0.07 of its total potential returns per unit of risk. ProShares Ultra 7 10 is currently generating about 0.0 per unit of volatility. If you would invest  4,270  in ProShares Ultra 7 10 on November 28, 2024 and sell it today you would lose (12.00) from holding ProShares Ultra 7 10 or give up 0.28% of portfolio value over 90 days.

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

iShares Expanded Tech Software  vs.  ProShares Ultra 7 10

iShares Expanded Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Expanded Tech Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

ProShares Ultra 7

Risk-Adjusted Performance

Weak

Over the last 90 days ProShares Ultra 7 10 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, UST Inc is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Expanded and UST Inc

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

The idea behind iShares Expanded Tech Software and ProShares Ultra 7 10 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.