Correlation Between ProShares Short and JPMorgan Short

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

Diversification Opportunities for ProShares Short and JPMorgan Short

-0.71

Correlation Coefficient

ProShares Short  JPMorgan Short

Pay attention - limited upside

The 3 months correlation between ProShares and JPMorgan is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Short 7 10 and JPMorgan Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Short Duration 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 JPMorgan Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Short Duration has no effect on the direction of ProShares Short i.e., ProShares Short and JPMorgan Short go up and down completely randomly.

Pair Corralation between ProShares Short and JPMorgan Short

Considering the 90-day investment horizon ProShares Short 7 10 is expected to generate 3.17 times more return on investment than JPMorgan Short. However, ProShares Short is 3.17 times more volatile than JPMorgan Short Duration. It trades about 0.28 of its potential returns per unit of risk. JPMorgan Short Duration is currently generating about -0.1 per unit of risk. If you would invest  2,718  in ProShares Short 7 10 on September 27, 2024 and sell it today you would earn a total of  205.00  from holding ProShares Short 7 10 or generate 7.54% return on investment over 90 days.

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

ProShares Short 7 10  vs.  JPMorgan Short Duration

ProShares Short 7

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Short 7 10 are ranked lower than 21 (%) 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.

JPMorgan Short Duration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMorgan Short Duration has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, JPMorgan Short is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with ProShares Short and JPMorgan Short

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

The idea behind ProShares Short 7 10 and JPMorgan Short Duration 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.