Correlation Between ATT and ProShares Ultra

Can any of the company-specific risk be diversified away by investing in both ATT and ProShares Ultra 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 Ultra 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 Ultra Russell2000, you can compare the effects of market volatilities on ATT and ProShares Ultra 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 Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and ProShares Ultra.

Diversification Opportunities for ATT and ProShares Ultra

0.55

Correlation Coefficient

ATT  ProShares Ultra

Very weak diversification

The 3 months correlation between ATT and ProShares is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and ProShares Ultra Russell2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Russ 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 Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra Russ has no effect on the direction of ATT i.e., ATT and ProShares Ultra go up and down completely randomly.

Pair Corralation between ATT and ProShares Ultra

Taking into account the 90-day investment horizon ATT is expected to generate 1.23 times less return on investment than ProShares Ultra. But when comparing it to its historical volatility, ATT Inc is 1.74 times less risky than ProShares Ultra. It trades about 0.04 of its potential returns per unit of risk. ProShares Ultra Russell2000 is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,666  in ProShares Ultra Russell2000 on October 22, 2024 and sell it today you would earn a total of  674.00  from holding ProShares Ultra Russell2000 or generate 18.39% return on investment over 90 days.

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

ATT Inc  vs.  ProShares Ultra Russell2000

ATT Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ATT is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

ProShares Ultra Russ

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Russell2000 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, ProShares Ultra is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ATT and ProShares Ultra

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

The idea behind ATT Inc and ProShares Ultra Russell2000 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.