Correlation Between ProShares Inflation and Return Stacked

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

By analyzing existing cross correlation between ProShares Inflation Expectations and Return Stacked Bonds, you can compare the effects of market volatilities on ProShares Inflation and Return Stacked 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 Inflation with a short position of Return Stacked. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Inflation and Return Stacked.

Diversification Opportunities for ProShares Inflation and Return Stacked

0.3

Correlation Coefficient

ProShares Inflation  Return Stacked

Weak diversification

The 3 months correlation between ProShares and Return is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Inflation Expectatio and Return Stacked Bonds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Return Stacked Bonds and ProShares Inflation 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 Inflation Expectations are associated (or correlated) with Return Stacked. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Return Stacked Bonds has no effect on the direction of ProShares Inflation i.e., ProShares Inflation and Return Stacked go up and down completely randomly.

Pair Corralation between ProShares Inflation and Return Stacked

Given the investment horizon of 90 days ProShares Inflation Expectations is expected to generate 0.31 times more return on investment than Return Stacked. However, ProShares Inflation Expectations is 3.21 times less risky than Return Stacked. It trades about -0.01 of its potential returns per unit of risk. Return Stacked Bonds is currently generating about -0.1 per unit of risk. If you would invest  3,264  in ProShares Inflation Expectations on December 29, 2024 and sell it today you would lose (6.00) from holding ProShares Inflation Expectations or give up 0.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

ProShares Inflation Expectatio  vs.  Return Stacked Bonds

ProShares Inflation

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Inflation Expectations has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ProShares Inflation is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Return Stacked Bonds

Risk-Adjusted Performance

Very Weak

Over the last 90 days Return Stacked Bonds has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Etf's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with ProShares Inflation and Return Stacked

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

The idea behind ProShares Inflation Expectations and Return Stacked Bonds 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.