Correlation Between ProShares UltraShort and Barclays Capital
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Barclays Capital 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 Barclays Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraShort MSCI and Barclays Capital, you can compare the effects of market volatilities on ProShares UltraShort and Barclays Capital 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 Barclays Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Barclays Capital.
Diversification Opportunities for ProShares UltraShort and Barclays Capital
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ProShares and Barclays is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort MSCI and Barclays Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays Capital 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 MSCI are associated (or correlated) with Barclays Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays Capital has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Barclays Capital go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Barclays Capital
Considering the 90-day investment horizon ProShares UltraShort MSCI is expected to under-perform the Barclays Capital. In addition to that, ProShares UltraShort is 1.76 times more volatile than Barclays Capital. It trades about -0.05 of its total potential returns per unit of risk. Barclays Capital is currently generating about -0.01 per unit of volatility. If you would invest 2,857 in Barclays Capital on January 19, 2024 and sell it today you would lose (15.00) from holding Barclays Capital or give up 0.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 16.74% |
| Values | Daily Returns |
ProShares UltraShort MSCI vs. Barclays Capital
Performance |
| Timeline |
| ProShares UltraShort MSCI |
| Barclays Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
ProShares UltraShort and Barclays Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Barclays Capital
The main advantage of trading using opposite ProShares UltraShort and Barclays Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Barclays Capital 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 Barclays Capital will offset losses from the drop in Barclays Capital's long position.| ProShares UltraShort vs. ProShares Ultra SP500 | ProShares UltraShort vs. HUMANA INC | ProShares UltraShort vs. Aquagold International | ProShares UltraShort vs. Thrivent High Yield |
| Barclays Capital vs. Vanguard Total Stock | Barclays Capital vs. SPDR SP 500 | Barclays Capital vs. iShares Core SP | Barclays Capital vs. Vanguard Total Bond |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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