Correlation Between ProShares Short and ProShares Short

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

By analyzing existing cross correlation between ProShares Short SP500 and ProShares Short SmallCap600, you can compare the effects of market volatilities on ProShares Short 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 ProShares Short with a short position of ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Short and ProShares Short.

Diversification Opportunities for ProShares Short and ProShares Short

0.72

Correlation Coefficient

ProShares Short  ProShares Short

Poor diversification

The 3 months correlation between ProShares and ProShares is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Short SP500 and ProShares Short SmallCap600 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short Smal 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 SP500 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 Smal has no effect on the direction of ProShares Short i.e., ProShares Short and ProShares Short go up and down completely randomly.

Pair Corralation between ProShares Short and ProShares Short

Allowing for the 90-day total investment horizon ProShares Short SP500 is expected to under-perform the ProShares Short. But the etf apears to be less risky and, when comparing its historical volatility, ProShares Short SP500 is 1.6 times less risky than ProShares Short. The etf trades about -0.07 of its potential returns per unit of risk. The ProShares Short SmallCap600 is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,608  in ProShares Short SmallCap600 on October 11, 2024 and sell it today you would lose (149.00) from holding ProShares Short SmallCap600 or give up 9.27% of portfolio value over 90 days.

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

ProShares Short SP500  vs.  ProShares Short SmallCap600

ProShares Short SP500

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Short SP500 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, ProShares Short is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

ProShares Short Smal

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Short SmallCap600 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, ProShares Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ProShares Short and ProShares Short

The main advantage of trading using opposite ProShares Short and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Short 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 ProShares Short SP500 and ProShares Short SmallCap600 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.