Correlation Between AXS TSLA and ProShares Short

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

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

Diversification Opportunities for AXS TSLA and ProShares Short

-0.37

Correlation Coefficient

AXS TSLA  ProShares Short

Very good diversification

The 3 months correlation between AXS and ProShares is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding AXS TSLA Bear and ProShares Short MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short MSCI and AXS TSLA 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 AXS TSLA Bear are associated (or correlated) with ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short MSCI has no effect on the direction of AXS TSLA i.e., AXS TSLA and ProShares Short go up and down completely randomly.

Pair Corralation between AXS TSLA and ProShares Short

Given the investment horizon of 90 days AXS TSLA Bear is expected to generate 8.35 times more return on investment than ProShares Short. However, AXS TSLA is 8.35 times more volatile than ProShares Short MSCI. It trades about 0.04 of its potential returns per unit of risk. ProShares Short MSCI is currently generating about -0.08 per unit of risk. If you would invest  4,092  in AXS TSLA Bear on November 28, 2024 and sell it today you would earn a total of  81.00  from holding AXS TSLA Bear or generate 1.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

AXS TSLA Bear  vs.  ProShares Short MSCI

AXS TSLA Bear

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AXS TSLA Bear are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain essential indicators, AXS TSLA reported solid returns over the last few months and may actually be approaching a breakup point.

ProShares Short MSCI

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Short MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, ProShares Short is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with AXS TSLA and ProShares Short

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

The idea behind AXS TSLA Bear and ProShares Short MSCI 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.