Correlation Between SWP Growth and ProShares UltraShort

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

By analyzing existing cross correlation between SWP Growth Income and ProShares UltraShort MSCI, you can compare the effects of market volatilities on SWP Growth and ProShares UltraShort 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 SWP Growth with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of SWP Growth and ProShares UltraShort.

Diversification Opportunities for SWP Growth and ProShares UltraShort

0.0

Correlation Coefficient

SWP Growth  ProShares UltraShort

Pay attention - limited upside

The 3 months correlation between SWP and ProShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SWP Growth Income and ProShares UltraShort MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort MSCI and SWP Growth 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 SWP Growth Income are associated (or correlated) with ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort MSCI has no effect on the direction of SWP Growth i.e., SWP Growth and ProShares UltraShort go up and down completely randomly.

Pair Corralation between SWP Growth and ProShares UltraShort

Considering the 90-day investment horizon SWP Growth Income is expected to generate 0.46 times more return on investment than ProShares UltraShort. However, SWP Growth Income is 2.18 times less risky than ProShares UltraShort. It trades about -0.04 of its potential returns per unit of risk. ProShares UltraShort MSCI is currently generating about -0.15 per unit of risk. If you would invest  2,548  in SWP Growth Income on December 27, 2024 and sell it today you would lose (56.00) from holding SWP Growth Income or give up 2.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SWP Growth Income  vs.  ProShares UltraShort MSCI

SWP Growth Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days SWP Growth Income has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, SWP Growth is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

ProShares UltraShort MSCI

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares UltraShort MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Etf's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with SWP Growth and ProShares UltraShort

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

The idea behind SWP Growth Income and ProShares UltraShort MSCI 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.