Correlation Between ProShares Short and SOGU

Can any of the company-specific risk be diversified away by investing in both ProShares Short and SOGU 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 SOGU 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 SOGU, you can compare the effects of market volatilities on ProShares Short and SOGU 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 SOGU. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Short and SOGU.

Diversification Opportunities for ProShares Short and SOGU

0.68

Correlation Coefficient

ProShares Short  SOGU

Poor diversification

The 3 months correlation between ProShares and SOGU is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Short SP500 and SOGU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOGU 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 SOGU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOGU has no effect on the direction of ProShares Short i.e., ProShares Short and SOGU go up and down completely randomly.

Pair Corralation between ProShares Short and SOGU

If you would invest  4,113  in ProShares Short SP500 on September 29, 2024 and sell it today you would earn a total of  58.00  from holding ProShares Short SP500 or generate 1.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	5.0%
Values	Daily Returns

ProShares Short SP500  vs.  SOGU

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 newest stock price confusion, may contribute to short-horizon losses for the traders.

SOGU

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOGU has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, SOGU is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ProShares Short and SOGU

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

The idea behind ProShares Short SP500 and SOGU 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.