Correlation Between ProShares UltraShort and Aptus Defined
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Aptus Defined 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 Aptus Defined 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 Aptus Defined Risk, you can compare the effects of market volatilities on ProShares UltraShort and Aptus Defined 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 Aptus Defined. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Aptus Defined.
Diversification Opportunities for ProShares UltraShort and Aptus Defined
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and Aptus is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort Utilities and Aptus Defined Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptus Defined Risk 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 Aptus Defined. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptus Defined Risk has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Aptus Defined go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Aptus Defined
Considering the 90-day investment horizon ProShares UltraShort Utilities is expected to generate 5.07 times more return on investment than Aptus Defined. However, ProShares UltraShort is 5.07 times more volatile than Aptus Defined Risk. It trades about 0.02 of its potential returns per unit of risk. Aptus Defined Risk is currently generating about 0.01 per unit of risk. If you would invest 1,094 in ProShares UltraShort Utilities on January 18, 2024 and sell it today you would earn a total of 116.00 from holding ProShares UltraShort Utilities or generate 10.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraShort Utilities vs. Aptus Defined Risk
Performance |
| Timeline |
| ProShares UltraShort |
| Aptus Defined Risk |
ProShares UltraShort and Aptus Defined Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Aptus Defined
The main advantage of trading using opposite ProShares UltraShort and Aptus Defined positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Aptus Defined 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 Aptus Defined will offset losses from the drop in Aptus Defined's long position.The idea behind ProShares UltraShort Utilities and Aptus Defined Risk 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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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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