Correlation Between Costamare and ProShares UltraShort

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Can any of the company-specific risk be diversified away by investing in both Costamare 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 Costamare and ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Costamare and ProShares UltraShort Bloomberg, you can compare the effects of market volatilities on Costamare 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 Costamare with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costamare and ProShares UltraShort.

Diversification Opportunities for Costamare and ProShares UltraShort

0.56
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Costamare and ProShares is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Costamare and ProShares UltraShort Bloomberg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort and Costamare 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 Costamare 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 Costamare i.e., Costamare and ProShares UltraShort go up and down completely randomly.

Pair Corralation between Costamare and ProShares UltraShort

Given the investment horizon of 90 days Costamare is expected to under-perform the ProShares UltraShort. But the stock apears to be less risky and, when comparing its historical volatility, Costamare is 3.31 times less risky than ProShares UltraShort. The stock trades about -0.05 of its potential returns per unit of risk. The ProShares UltraShort Bloomberg is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  13,024  in ProShares UltraShort Bloomberg on December 29, 2023 and sell it today you would earn a total of  3,171  from holding ProShares UltraShort Bloomberg or generate 24.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.65%
ValuesDaily Returns

Costamare  vs.  ProShares UltraShort Bloomberg

 Performance 
       Timeline  
Costamare 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Costamare are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Costamare may actually be approaching a critical reversion point that can send shares even higher in April 2024.
ProShares UltraShort 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in ProShares UltraShort Bloomberg are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, ProShares UltraShort exhibited solid returns over the last few months and may actually be approaching a breakup point.

Costamare and ProShares UltraShort Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Costamare and ProShares UltraShort

The main advantage of trading using opposite Costamare and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costamare 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 Costamare and ProShares UltraShort Bloomberg 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.
Check out your portfolio center.
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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