Correlation Between PROSHARES ULTRASHORT and SSGA Active

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

Diversification Opportunities for PROSHARES ULTRASHORT and SSGA Active

-0.74

Correlation Coefficient

PROSHARES ULTRASHORT  SSGA Active

Pay attention - limited upside

The 3 months correlation between PROSHARES and SSGA is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding PROSHARES ULTRASHORT RUSSELL and SSGA Active Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSGA Active Trust 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 SSGA Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSGA Active Trust has no effect on the direction of PROSHARES ULTRASHORT i.e., PROSHARES ULTRASHORT and SSGA Active go up and down completely randomly.

Pair Corralation between PROSHARES ULTRASHORT and SSGA Active

Considering the 90-day investment horizon PROSHARES ULTRASHORT RUSSELL is expected to under-perform the SSGA Active. In addition to that, PROSHARES ULTRASHORT is 108.87 times more volatile than SSGA Active Trust. It trades about -0.08 of its total potential returns per unit of risk. SSGA Active Trust is currently generating about 0.05 per unit of volatility. If you would invest  2,932  in SSGA Active Trust on September 21, 2024 and sell it today you would earn a total of  29.00  from holding SSGA Active Trust or generate 0.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	42.06%
Values	Daily Returns

PROSHARES ULTRASHORT RUSSELL  vs.  SSGA Active Trust

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.

SSGA Active Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SSGA Active Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, SSGA Active is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with PROSHARES ULTRASHORT and SSGA Active

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

The idea behind PROSHARES ULTRASHORT RUSSELL and SSGA Active Trust 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 Transaction History module to view history of all your transactions and understand their impact on performance.