Correlation Between Columbia ETF and ProShares Short

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

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

Diversification Opportunities for Columbia ETF and ProShares Short

-0.56

Correlation Coefficient

Columbia ETF  ProShares Short

Excellent diversification

The 3 months correlation between Columbia and ProShares is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Columbia ETF Trust and ProShares Short High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short High and Columbia ETF 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 Columbia ETF Trust are associated (or correlated) with ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short High has no effect on the direction of Columbia ETF i.e., Columbia ETF and ProShares Short go up and down completely randomly.

Pair Corralation between Columbia ETF and ProShares Short

Given the investment horizon of 90 days Columbia ETF Trust is expected to under-perform the ProShares Short. In addition to that, Columbia ETF is 1.07 times more volatile than ProShares Short High. It trades about -0.14 of its total potential returns per unit of risk. ProShares Short High is currently generating about 0.17 per unit of volatility. If you would invest  1,592  in ProShares Short High on October 6, 2024 and sell it today you would earn a total of  17.00  from holding ProShares Short High or generate 1.07% return on investment over 90 days.

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

Columbia ETF Trust  vs.  ProShares Short High

Columbia ETF Trust

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia ETF Trust are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Columbia ETF is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

ProShares Short High

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Short High are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward-looking indicators, ProShares Short is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Columbia ETF and ProShares Short

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

The idea behind Columbia ETF Trust and ProShares Short High 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 Commodity Directory module to find actively traded commodities issued by global exchanges.