Correlation Between IShares Edge and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both IShares Edge 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 IShares Edge and ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Edge MSCI and ProShares UltraShort Utilities, you can compare the effects of market volatilities on IShares Edge 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 IShares Edge with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Edge and ProShares UltraShort.
Diversification Opportunities for IShares Edge and ProShares UltraShort
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IShares and ProShares is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding iShares Edge MSCI and ProShares UltraShort Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort and IShares Edge 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 iShares Edge MSCI 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 IShares Edge i.e., IShares Edge and ProShares UltraShort go up and down completely randomly.
Pair Corralation between IShares Edge and ProShares UltraShort
Given the investment horizon of 90 days iShares Edge MSCI is expected to generate 0.39 times more return on investment than ProShares UltraShort. However, iShares Edge MSCI is 2.6 times less risky than ProShares UltraShort. It trades about 0.07 of its potential returns per unit of risk. ProShares UltraShort Utilities is currently generating about 0.02 per unit of risk. If you would invest 2,403 in iShares Edge MSCI on January 24, 2024 and sell it today you would earn a total of 496.00 from holding iShares Edge MSCI or generate 20.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Edge MSCI vs. ProShares UltraShort Utilities
Performance |
| Timeline |
| iShares Edge MSCI |
| ProShares UltraShort |
IShares Edge and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Edge and ProShares UltraShort
The main advantage of trading using opposite IShares Edge and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Edge 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.| IShares Edge vs. iShares ESG Aware | IShares Edge vs. iShares ESG Aware | IShares Edge vs. iShares ESG Aware | IShares Edge vs. iShares MSCI USA |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |