Correlation Between PROSHARES ULTRASHORT and Jacobs Solutions

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

Diversification Opportunities for PROSHARES ULTRASHORT and Jacobs Solutions

0.69

Correlation Coefficient

PROSHARES ULTRASHORT  Jacobs Solutions

Poor diversification

The 3 months correlation between PROSHARES and Jacobs is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding PROSHARES ULTRASHORT RUSSELL and Jacobs Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacobs Solutions 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 Jacobs Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacobs Solutions has no effect on the direction of PROSHARES ULTRASHORT i.e., PROSHARES ULTRASHORT and Jacobs Solutions go up and down completely randomly.

Pair Corralation between PROSHARES ULTRASHORT and Jacobs Solutions

Considering the 90-day investment horizon PROSHARES ULTRASHORT RUSSELL is expected to under-perform the Jacobs Solutions. In addition to that, PROSHARES ULTRASHORT is 12.14 times more volatile than Jacobs Solutions. It trades about -0.08 of its total potential returns per unit of risk. Jacobs Solutions is currently generating about -0.09 per unit of volatility. If you would invest  14,325  in Jacobs Solutions on September 21, 2024 and sell it today you would lose (919.00) from holding Jacobs Solutions or give up 6.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.73%
Values	Daily Returns

PROSHARES ULTRASHORT RUSSELL  vs.  Jacobs Solutions

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 fragile 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.

Jacobs Solutions

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jacobs Solutions are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady forward-looking indicators, Jacobs Solutions may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PROSHARES ULTRASHORT and Jacobs Solutions

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

The idea behind PROSHARES ULTRASHORT RUSSELL and Jacobs Solutions 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.