Correlation Between Meta Platforms and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both Meta Platforms 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 Meta Platforms and ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and ProShares UltraShort SP500, you can compare the effects of market volatilities on Meta Platforms 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 Meta Platforms with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and ProShares UltraShort.
Diversification Opportunities for Meta Platforms and ProShares UltraShort
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Meta and ProShares is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and ProShares UltraShort SP500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort and Meta Platforms 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 Meta Platforms 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 Meta Platforms i.e., Meta Platforms and ProShares UltraShort go up and down completely randomly.
Pair Corralation between Meta Platforms and ProShares UltraShort
Allowing for the 90-day total investment horizon Meta Platforms is expected to under-perform the ProShares UltraShort. In addition to that, Meta Platforms is 1.88 times more volatile than ProShares UltraShort SP500. It trades about -0.08 of its total potential returns per unit of risk. ProShares UltraShort SP500 is currently generating about -0.02 per unit of volatility. If you would invest 3,685 in ProShares UltraShort SP500 on December 30, 2023 and sell it today you would lose (1,199) from holding ProShares UltraShort SP500 or give up 32.54% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 10.93% |
Values | Daily Returns |
Meta Platforms vs. ProShares UltraShort SP500
Performance |
Timeline |
Meta Platforms |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
ProShares UltraShort |
Meta Platforms and ProShares UltraShort Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Meta Platforms and ProShares UltraShort
The main advantage of trading using opposite Meta Platforms and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms 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.Meta Platforms vs. Amgen Inc | Meta Platforms vs. Apogee Enterprises | Meta Platforms vs. Simpson Manufacturing | Meta Platforms vs. Western Digital |
ProShares UltraShort vs. Northern Lights | ProShares UltraShort vs. Dimensional International High | ProShares UltraShort vs. First Trust Exchange Traded | ProShares UltraShort vs. EA Series Trust |
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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Equity Valuation Check real value of public entities based on technical and fundamental data | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Bonds Directory Find actively traded corporate debentures issued by US companies |