Correlation Between United States and ProShares

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

By analyzing existing cross correlation between United States 12 and ProShares K 1 Free, you can compare the effects of market volatilities on United States and ProShares 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 United States with a short position of ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and ProShares.

Diversification Opportunities for United States and ProShares

-0.59

Correlation Coefficient

United States  ProShares

Excellent diversification

The 3 months correlation between United and ProShares is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding United States 12 and ProShares K 1 Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares K 1 and United States 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 United States 12 are associated (or correlated) with ProShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares K 1 has no effect on the direction of United States i.e., United States and ProShares go up and down completely randomly.

Pair Corralation between United States and ProShares

Considering the 90-day investment horizon United States 12 is expected to generate 2.25 times more return on investment than ProShares. However, United States is 2.25 times more volatile than ProShares K 1 Free. It trades about 0.17 of its potential returns per unit of risk. ProShares K 1 Free is currently generating about 0.0 per unit of risk. If you would invest  781.00  in United States 12 on December 21, 2024 and sell it today you would earn a total of  232.00  from holding United States 12 or generate 29.71% return on investment over 90 days.

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

United States 12  vs.  ProShares K 1 Free

United States 12

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United States 12 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, United States disclosed solid returns over the last few months and may actually be approaching a breakup point.

ProShares K 1

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares K 1 Free has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, ProShares is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with United States and ProShares

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

The idea behind United States 12 and ProShares K 1 Free 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.