Correlation Between ProShares UltraShort and Davis Select
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Davis Select 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 Davis Select 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 Davis Select Financial, you can compare the effects of market volatilities on ProShares UltraShort and Davis Select 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 Davis Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Davis Select.
Diversification Opportunities for ProShares UltraShort and Davis Select
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and Davis is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort Utilities and Davis Select Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davis Select Financial 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 Davis Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davis Select Financial has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Davis Select go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Davis Select
Considering the 90-day investment horizon ProShares UltraShort Utilities is expected to under-perform the Davis Select. In addition to that, ProShares UltraShort is 2.04 times more volatile than Davis Select Financial. It trades about -0.13 of its total potential returns per unit of risk. Davis Select Financial is currently generating about 0.06 per unit of volatility. If you would invest 3,246 in Davis Select Financial on January 25, 2024 and sell it today you would earn a total of 44.00 from holding Davis Select Financial or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraShort Utilities vs. Davis Select Financial
Performance |
| Timeline |
| ProShares UltraShort |
| Davis Select Financial |
ProShares UltraShort and Davis Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Davis Select
The main advantage of trading using opposite ProShares UltraShort and Davis Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Davis Select 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 Davis Select will offset losses from the drop in Davis Select's long position.| ProShares UltraShort vs. Direxion Daily Semiconductor | ProShares UltraShort vs. Direxion Daily SP | ProShares UltraShort vs. Direxion Daily SP | ProShares UltraShort vs. Direxion Daily SP |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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