Correlation Between ProShares Short and Tuttle Capital

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

By analyzing existing cross correlation between ProShares Short SmallCap600 and Tuttle Capital Daily, you can compare the effects of market volatilities on ProShares Short and Tuttle Capital 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 Short with a short position of Tuttle Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Short and Tuttle Capital.

Diversification Opportunities for ProShares Short and Tuttle Capital

0.87

Correlation Coefficient

ProShares Short  Tuttle Capital

Very poor diversification

The 3 months correlation between ProShares and Tuttle is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Short SmallCap600 and Tuttle Capital Daily in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tuttle Capital Daily and ProShares 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 ProShares Short SmallCap600 are associated (or correlated) with Tuttle Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tuttle Capital Daily has no effect on the direction of ProShares Short i.e., ProShares Short and Tuttle Capital go up and down completely randomly.

Pair Corralation between ProShares Short and Tuttle Capital

Considering the 90-day investment horizon ProShares Short is expected to generate 1.19 times less return on investment than Tuttle Capital. But when comparing it to its historical volatility, ProShares Short SmallCap600 is 2.57 times less risky than Tuttle Capital. It trades about 0.15 of its potential returns per unit of risk. Tuttle Capital Daily is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,324  in Tuttle Capital Daily on December 29, 2024 and sell it today you would earn a total of  145.00  from holding Tuttle Capital Daily or generate 10.95% return on investment over 90 days.

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

ProShares Short SmallCap600  vs.  Tuttle Capital Daily

ProShares Short Smal

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Short SmallCap600 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental drivers, ProShares Short may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Tuttle Capital Daily

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tuttle Capital Daily are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Tuttle Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares Short and Tuttle Capital

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

The idea behind ProShares Short SmallCap600 and Tuttle Capital Daily 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.