Correlation Between IShares Aerospace and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both IShares Aerospace 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 Aerospace 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 Aerospace Defense and ProShares UltraShort Bloomberg, you can compare the effects of market volatilities on IShares Aerospace 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 Aerospace with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Aerospace and ProShares UltraShort.
Diversification Opportunities for IShares Aerospace and ProShares UltraShort
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IShares and ProShares is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding iShares Aerospace Defense and ProShares UltraShort Bloomberg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort and IShares Aerospace 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 Aerospace Defense 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 Aerospace i.e., IShares Aerospace and ProShares UltraShort go up and down completely randomly.
Pair Corralation between IShares Aerospace and ProShares UltraShort
Considering the 90-day investment horizon iShares Aerospace Defense is expected to generate 0.4 times more return on investment than ProShares UltraShort. However, iShares Aerospace Defense is 2.53 times less risky than ProShares UltraShort. It trades about -0.03 of its potential returns per unit of risk. ProShares UltraShort Bloomberg is currently generating about -0.03 per unit of risk. If you would invest 12,798 in iShares Aerospace Defense on January 19, 2024 and sell it today you would lose (52.00) from holding iShares Aerospace Defense or give up 0.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
iShares Aerospace Defense vs. ProShares UltraShort Bloomberg
Performance |
| Timeline |
| iShares Aerospace Defense |
| ProShares UltraShort |
IShares Aerospace and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Aerospace and ProShares UltraShort
The main advantage of trading using opposite IShares Aerospace and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Aerospace 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 Aerospace vs. Invesco DWA Utilities | IShares Aerospace vs. Invesco Dynamic Food | IShares Aerospace vs. HUMANA INC | IShares Aerospace vs. Aquagold International |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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