Correlation Between US Global and ProShares Online

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

By analyzing existing cross correlation between US Global Jets and ProShares Online Retail, you can compare the effects of market volatilities on US Global and ProShares Online 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 US Global with a short position of ProShares Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Global and ProShares Online.

Diversification Opportunities for US Global and ProShares Online

0.5

Correlation Coefficient

US Global  ProShares Online

Very weak diversification

The 3 months correlation between JETS and ProShares is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding US Global Jets and ProShares Online Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Online Retail and US Global 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 US Global Jets are associated (or correlated) with ProShares Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Online Retail has no effect on the direction of US Global i.e., US Global and ProShares Online go up and down completely randomly.

Pair Corralation between US Global and ProShares Online

Given the investment horizon of 90 days US Global is expected to generate 1.16 times less return on investment than ProShares Online. But when comparing it to its historical volatility, US Global Jets is 1.06 times less risky than ProShares Online. It trades about 0.06 of its potential returns per unit of risk. ProShares Online Retail is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,980  in ProShares Online Retail on September 25, 2024 and sell it today you would earn a total of  1,606  from holding ProShares Online Retail or generate 53.89% return on investment over 90 days.

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

US Global Jets  vs.  ProShares Online Retail

US Global Jets

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in US Global Jets are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, US Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

ProShares Online Retail

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Online Retail are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, ProShares Online is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with US Global and ProShares Online

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

The idea behind US Global Jets and ProShares Online Retail 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.