Correlation Between PROSHARES ULTRASHORT and Dycom Industries

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

By analyzing existing cross correlation between PROSHARES ULTRASHORT RUSSELL and Dycom Industries, you can compare the effects of market volatilities on PROSHARES ULTRASHORT and Dycom Industries 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 ULTRASHORT with a short position of Dycom Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of PROSHARES ULTRASHORT and Dycom Industries.

Diversification Opportunities for PROSHARES ULTRASHORT and Dycom Industries

0.28

Correlation Coefficient

PROSHARES ULTRASHORT  Dycom Industries

Modest diversification

The 3 months correlation between PROSHARES and Dycom is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding PROSHARES ULTRASHORT RUSSELL and Dycom Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dycom Industries and PROSHARES ULTRASHORT 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 ULTRASHORT RUSSELL are associated (or correlated) with Dycom Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dycom Industries has no effect on the direction of PROSHARES ULTRASHORT i.e., PROSHARES ULTRASHORT and Dycom Industries go up and down completely randomly.

Pair Corralation between PROSHARES ULTRASHORT and Dycom Industries

Considering the 90-day investment horizon PROSHARES ULTRASHORT RUSSELL is expected to under-perform the Dycom Industries. In addition to that, PROSHARES ULTRASHORT is 6.77 times more volatile than Dycom Industries. It trades about -0.01 of its total potential returns per unit of risk. Dycom Industries is currently generating about -0.05 per unit of volatility. If you would invest  19,710  in Dycom Industries on September 30, 2024 and sell it today you would lose (2,193) from holding Dycom Industries or give up 11.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	92.19%
Values	Daily Returns

PROSHARES ULTRASHORT RUSSELL  vs.  Dycom Industries

PROSHARES ULTRASHORT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PROSHARES ULTRASHORT RUSSELL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite sluggish performance in the last few months, the Etf's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the ETF venture institutional investors.

Dycom Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dycom Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with PROSHARES ULTRASHORT and Dycom Industries

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

The idea behind PROSHARES ULTRASHORT RUSSELL and Dycom Industries 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.