Correlation Between ProShares UltraShort and Dupont De

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Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Dupont De 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 Dupont De into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraShort Utilities and Dupont De Nemours, you can compare the effects of market volatilities on ProShares UltraShort and Dupont De 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 Dupont De. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Dupont De.

Diversification Opportunities for ProShares UltraShort and Dupont De

-0.74
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between ProShares and Dupont is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort Utilities and Dupont De Nemours in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dupont De Nemours 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 Utilities are associated (or correlated) with Dupont De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dupont De Nemours has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Dupont De go up and down completely randomly.

Pair Corralation between ProShares UltraShort and Dupont De

Considering the 90-day investment horizon ProShares UltraShort Utilities is expected to generate 1.35 times more return on investment than Dupont De. However, ProShares UltraShort is 1.35 times more volatile than Dupont De Nemours. It trades about 0.02 of its potential returns per unit of risk. Dupont De Nemours is currently generating about 0.03 per unit of risk. If you would invest  1,032  in ProShares UltraShort Utilities on December 30, 2023 and sell it today you would earn a total of  118.00  from holding ProShares UltraShort Utilities or generate 11.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

ProShares UltraShort Utilities  vs.  Dupont De Nemours

 Performance 
       Timeline  
ProShares UltraShort 

Risk-Adjusted Performance

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High
Very Weak
Over the last 90 days ProShares UltraShort Utilities has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, ProShares UltraShort is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
Dupont De Nemours 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Weak
Over the last 90 days Dupont De Nemours has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Dupont De is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

ProShares UltraShort and Dupont De Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ProShares UltraShort and Dupont De

The main advantage of trading using opposite ProShares UltraShort and Dupont De positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Dupont De 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 Dupont De will offset losses from the drop in Dupont De's long position.
The idea behind ProShares UltraShort Utilities and Dupont De Nemours pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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