Correlation Between ProShares Supply and Breakwave Dry

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

By analyzing existing cross correlation between ProShares Supply Chain and Breakwave Dry Bulk, you can compare the effects of market volatilities on ProShares Supply and Breakwave Dry 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 Supply with a short position of Breakwave Dry. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Supply and Breakwave Dry.

Diversification Opportunities for ProShares Supply and Breakwave Dry

0.31

Correlation Coefficient

ProShares Supply  Breakwave Dry

Weak diversification

The 3 months correlation between ProShares and Breakwave is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Supply Chain and Breakwave Dry Bulk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Breakwave Dry Bulk and ProShares Supply 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 Supply Chain are associated (or correlated) with Breakwave Dry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Breakwave Dry Bulk has no effect on the direction of ProShares Supply i.e., ProShares Supply and Breakwave Dry go up and down completely randomly.

Pair Corralation between ProShares Supply and Breakwave Dry

Given the investment horizon of 90 days ProShares Supply Chain is expected to generate 0.26 times more return on investment than Breakwave Dry. However, ProShares Supply Chain is 3.85 times less risky than Breakwave Dry. It trades about 0.03 of its potential returns per unit of risk. Breakwave Dry Bulk is currently generating about -0.01 per unit of risk. If you would invest  3,309  in ProShares Supply Chain on October 7, 2024 and sell it today you would earn a total of  489.00  from holding ProShares Supply Chain or generate 14.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ProShares Supply Chain  vs.  Breakwave Dry Bulk

ProShares Supply Chain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Supply Chain has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, ProShares Supply is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Breakwave Dry Bulk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Breakwave Dry Bulk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with ProShares Supply and Breakwave Dry

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

The idea behind ProShares Supply Chain and Breakwave Dry Bulk 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.