Correlation Between ATT and ProShares Short
Can any of the company-specific risk be diversified away by investing in both ATT and ProShares Short 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 ATT and ProShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and ProShares Short VIX, you can compare the effects of market volatilities on ATT and ProShares Short 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 ATT with a short position of ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and ProShares Short.
Diversification Opportunities for ATT and ProShares Short
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between ATT and ProShares is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and ProShares Short VIX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short VIX and ATT 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 ATT Inc are associated (or correlated) with ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short VIX has no effect on the direction of ATT i.e., ATT and ProShares Short go up and down completely randomly.
Pair Corralation between ATT and ProShares Short
Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.64 times more return on investment than ProShares Short. However, ATT Inc is 1.55 times less risky than ProShares Short. It trades about 0.14 of its potential returns per unit of risk. ProShares Short VIX is currently generating about -0.08 per unit of risk. If you would invest 2,323 in ATT Inc on December 4, 2024 and sell it today you would earn a total of 299.00 from holding ATT Inc or generate 12.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
ATT Inc vs. ProShares Short VIX
Performance |
Timeline |
ATT Inc |
ProShares Short VIX |
ATT and ProShares Short Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ATT and ProShares Short
The main advantage of trading using opposite ATT and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, ProShares Short 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 Short will offset losses from the drop in ProShares Short's long position.The idea behind ATT Inc and ProShares Short VIX 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.ProShares Short vs. ProShares Ultra VIX | ProShares Short vs. ProShares VIX Short Term | ProShares Short vs. iPath Series B | ProShares Short vs. Direxion Daily Gold |
Check out your portfolio center.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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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