Correlation Between ProShares UltraShort and Xtrackers Harvest

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

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

Diversification Opportunities for ProShares UltraShort and Xtrackers Harvest

-0.52

Correlation Coefficient

ProShares UltraShort  Xtrackers Harvest

Excellent diversification

The 3 months correlation between ProShares and Xtrackers is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort Yen and Xtrackers Harvest CSI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Harvest CSI and ProShares UltraShort 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 UltraShort Yen are associated (or correlated) with Xtrackers Harvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Harvest CSI has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Xtrackers Harvest go up and down completely randomly.

Pair Corralation between ProShares UltraShort and Xtrackers Harvest

Considering the 90-day investment horizon ProShares UltraShort Yen is expected to generate 0.76 times more return on investment than Xtrackers Harvest. However, ProShares UltraShort Yen is 1.32 times less risky than Xtrackers Harvest. It trades about 0.09 of its potential returns per unit of risk. Xtrackers Harvest CSI is currently generating about -0.03 per unit of risk. If you would invest  4,364  in ProShares UltraShort Yen on October 24, 2024 and sell it today you would earn a total of  321.00  from holding ProShares UltraShort Yen or generate 7.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

ProShares UltraShort Yen  vs.  Xtrackers Harvest CSI

ProShares UltraShort Yen

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares UltraShort Yen are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating fundamental indicators, ProShares UltraShort may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Xtrackers Harvest CSI

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ProShares UltraShort and Xtrackers Harvest

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

The idea behind ProShares UltraShort Yen and Xtrackers Harvest CSI 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.