Correlation Between Strategy Shares and ProShares Inflation

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

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

Diversification Opportunities for Strategy Shares and ProShares Inflation

-0.91

Correlation Coefficient

Strategy Shares  ProShares Inflation

Pay attention - limited upside

The 3 months correlation between Strategy and ProShares is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Strategy Shares and ProShares Inflation Expectatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Inflation and Strategy Shares 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 Strategy Shares are associated (or correlated) with ProShares Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Inflation has no effect on the direction of Strategy Shares i.e., Strategy Shares and ProShares Inflation go up and down completely randomly.

Pair Corralation between Strategy Shares and ProShares Inflation

Given the investment horizon of 90 days Strategy Shares is expected to generate 0.78 times more return on investment than ProShares Inflation. However, Strategy Shares is 1.29 times less risky than ProShares Inflation. It trades about 0.08 of its potential returns per unit of risk. ProShares Inflation Expectations is currently generating about -0.1 per unit of risk. If you would invest  2,125  in Strategy Shares on September 18, 2024 and sell it today you would earn a total of  11.00  from holding Strategy Shares or generate 0.52% return on investment over 90 days.

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

Strategy Shares   vs.  ProShares Inflation Expectatio

Strategy Shares

Risk-Adjusted Performance

0 of 100

Very Weak

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

ProShares Inflation

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Inflation Expectations are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ProShares Inflation is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Strategy Shares and ProShares Inflation

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

The idea behind Strategy Shares and ProShares Inflation Expectations 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.