Correlation Between IShares Short and ProShares UltraShort

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

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

Diversification Opportunities for IShares Short and ProShares UltraShort

-0.88

Correlation Coefficient

IShares Short  ProShares UltraShort

Pay attention - limited upside

The 3 months correlation between IShares and ProShares is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding iShares Short Maturity and ProShares UltraShort Bloomberg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort and IShares Short 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 Short Maturity are associated (or correlated) with ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort has no effect on the direction of IShares Short i.e., IShares Short and ProShares UltraShort go up and down completely randomly.

Pair Corralation between IShares Short and ProShares UltraShort

Given the investment horizon of 90 days iShares Short Maturity is expected to generate 0.01 times more return on investment than ProShares UltraShort. However, iShares Short Maturity is 81.83 times less risky than ProShares UltraShort. It trades about 0.26 of its potential returns per unit of risk. ProShares UltraShort Bloomberg is currently generating about -0.11 per unit of risk. If you would invest  5,009  in iShares Short Maturity on December 30, 2024 and sell it today you would earn a total of  77.00  from holding iShares Short Maturity or generate 1.54% return on investment over 90 days.

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

iShares Short Maturity  vs.  ProShares UltraShort Bloomberg

iShares Short Maturity

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Short Maturity are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, IShares Short is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

ProShares UltraShort

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares UltraShort Bloomberg has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Etf's essential indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with IShares Short and ProShares UltraShort

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

The idea behind iShares Short Maturity and ProShares UltraShort Bloomberg 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.