Correlation Between ProShares UltraShort and SOGU

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

Diversification Opportunities for ProShares UltraShort and SOGU

-0.46

Correlation Coefficient

ProShares UltraShort  SOGU

Very good diversification

The 3 months correlation between ProShares and SOGU is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort 20 and SOGU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOGU 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 SOGU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOGU has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and SOGU go up and down completely randomly.

Pair Corralation between ProShares UltraShort and SOGU

If you would invest  3,202  in ProShares UltraShort 20 on September 29, 2024 and sell it today you would earn a total of  483.00  from holding ProShares UltraShort 20 or generate 15.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.0%
Values	Daily Returns

ProShares UltraShort 20  vs.  SOGU

ProShares UltraShort

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares UltraShort 20 are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental drivers, ProShares UltraShort unveiled solid returns over the last few months and may actually be approaching a breakup point.

SOGU

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOGU has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, SOGU is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ProShares UltraShort and SOGU

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

The idea behind ProShares UltraShort 20 and SOGU 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.