Correlation Between IShares 20 and ProShares UltraShort

Can any of the company-specific risk be diversified away by investing in both IShares 20 and ProShares UltraShort 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 IShares 20 and ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares 20 Year and ProShares UltraShort SP500, you can compare the effects of market volatilities on IShares 20 and ProShares UltraShort 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 IShares 20 with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 20 and ProShares UltraShort.

Diversification Opportunities for IShares 20 and ProShares UltraShort

0.44

Correlation Coefficient

IShares 20  ProShares UltraShort

Very weak diversification

The 3 months correlation between IShares and ProShares is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding iShares 20 Year and ProShares UltraShort SP500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort and IShares 20 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 iShares 20 Year are associated (or correlated) with ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort has no effect on the direction of IShares 20 i.e., IShares 20 and ProShares UltraShort go up and down completely randomly.

Pair Corralation between IShares 20 and ProShares UltraShort

Considering the 90-day investment horizon iShares 20 Year is expected to generate 0.65 times more return on investment than ProShares UltraShort. However, iShares 20 Year is 1.55 times less risky than ProShares UltraShort. It trades about 0.0 of its potential returns per unit of risk. ProShares UltraShort SP500 is currently generating about -0.08 per unit of risk. If you would invest  9,242  in iShares 20 Year on September 20, 2024 and sell it today you would lose (461.00) from holding iShares 20 Year or give up 4.99% of portfolio value over 90 days.

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

iShares 20 Year  vs.  ProShares UltraShort SP500

iShares 20 Year

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares 20 Year has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Etf's essential indicators 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.

ProShares UltraShort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares UltraShort SP500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, ProShares UltraShort is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares 20 and ProShares UltraShort

The main advantage of trading using opposite IShares 20 and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 20 position performs unexpectedly, ProShares UltraShort 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 UltraShort will offset losses from the drop in ProShares UltraShort's long position.

The idea behind iShares 20 Year and ProShares UltraShort SP500 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.