Correlation Between ProShares Short and Dimensional International

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

By analyzing existing cross correlation between ProShares Short 7 10 and Dimensional International High, you can compare the effects of market volatilities on ProShares Short and Dimensional International 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 Short with a short position of Dimensional International. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Short and Dimensional International.

Diversification Opportunities for ProShares Short and Dimensional International

-0.94

Correlation Coefficient

ProShares Short  Dimensional International

Pay attention - limited upside

The 3 months correlation between ProShares and Dimensional is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Short 7 10 and Dimensional International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional International and ProShares Short 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 Short 7 10 are associated (or correlated) with Dimensional International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional International has no effect on the direction of ProShares Short i.e., ProShares Short and Dimensional International go up and down completely randomly.

Pair Corralation between ProShares Short and Dimensional International

Considering the 90-day investment horizon ProShares Short is expected to generate 1.3 times less return on investment than Dimensional International. But when comparing it to its historical volatility, ProShares Short 7 10 is 1.56 times less risky than Dimensional International. It trades about 0.06 of its potential returns per unit of risk. Dimensional International High is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,130  in Dimensional International High on September 26, 2024 and sell it today you would earn a total of  402.00  from holding Dimensional International High or generate 18.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

ProShares Short 7 10  vs.  Dimensional International High

ProShares Short 7

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Short 7 10 are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental drivers, ProShares Short may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dimensional International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dimensional International High has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Etf's technical indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Pair Trading with ProShares Short and Dimensional International

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

The idea behind ProShares Short 7 10 and Dimensional International High 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.