Correlation Between ProShares UltraShort and IShares MSCI

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

By analyzing existing cross correlation between ProShares UltraShort 20 and iShares MSCI Austria, you can compare the effects of market volatilities on ProShares UltraShort and IShares MSCI 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 UltraShort with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and IShares MSCI.

Diversification Opportunities for ProShares UltraShort and IShares MSCI

-0.77

Correlation Coefficient

ProShares UltraShort  IShares MSCI

Pay attention - limited upside

The 3 months correlation between ProShares and IShares is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort 20 and iShares MSCI Austria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Austria and ProShares UltraShort 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 UltraShort 20 are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Austria has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and IShares MSCI go up and down completely randomly.

Pair Corralation between ProShares UltraShort and IShares MSCI

Considering the 90-day investment horizon ProShares UltraShort 20 is expected to under-perform the IShares MSCI. In addition to that, ProShares UltraShort is 1.07 times more volatile than iShares MSCI Austria. It trades about -0.08 of its total potential returns per unit of risk. iShares MSCI Austria is currently generating about 0.29 per unit of volatility. If you would invest  2,086  in iShares MSCI Austria on December 21, 2024 and sell it today you would earn a total of  580.00  from holding iShares MSCI Austria or generate 27.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

ProShares UltraShort 20  vs.  iShares MSCI Austria

ProShares UltraShort

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares UltraShort 20 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's fundamental drivers remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

iShares MSCI Austria

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI Austria are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, IShares MSCI displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares UltraShort and IShares MSCI

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

The idea behind ProShares UltraShort 20 and iShares MSCI Austria 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.