Correlation Between ProShares UltraShort and IShares Inflation
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and IShares Inflation 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 IShares Inflation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraShort Bloomberg and iShares Inflation Hedged, you can compare the effects of market volatilities on ProShares UltraShort and IShares Inflation 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 IShares Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and IShares Inflation.
Diversification Opportunities for ProShares UltraShort and IShares Inflation
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ProShares and IShares is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort Bloomberg and iShares Inflation Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Inflation Hedged 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 Bloomberg are associated (or correlated) with IShares Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Inflation Hedged has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and IShares Inflation go up and down completely randomly.
Pair Corralation between ProShares UltraShort and IShares Inflation
Given the investment horizon of 90 days ProShares UltraShort Bloomberg is expected to generate 14.37 times more return on investment than IShares Inflation. However, ProShares UltraShort is 14.37 times more volatile than iShares Inflation Hedged. It trades about 0.08 of its potential returns per unit of risk. iShares Inflation Hedged is currently generating about 0.01 per unit of risk. If you would invest 1,364 in ProShares UltraShort Bloomberg on January 26, 2024 and sell it today you would earn a total of 5,831 from holding ProShares UltraShort Bloomberg or generate 427.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
ProShares UltraShort Bloomberg vs. iShares Inflation Hedged
Performance |
| Timeline |
| ProShares UltraShort |
| iShares Inflation Hedged |
ProShares UltraShort and IShares Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and IShares Inflation
The main advantage of trading using opposite ProShares UltraShort and IShares Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, IShares Inflation 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 IShares Inflation will offset losses from the drop in IShares Inflation's long position.| ProShares UltraShort vs. ProShares Ultra Bloomberg | ProShares UltraShort vs. Direxion Daily Semiconductor | ProShares UltraShort vs. MicroSectors Big Oil | ProShares UltraShort vs. Direxion Daily SP |
| IShares Inflation vs. iShares iBoxx High | IShares Inflation vs. iShares 1 3 Year | IShares Inflation vs. iShares TIPS Bond | IShares Inflation vs. iShares 7 10 Year |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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