Correlation Between ProShares UltraShort and Consumer Discretionary
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Consumer Discretionary 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 Consumer Discretionary 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 Consumer Discretionary Select, you can compare the effects of market volatilities on ProShares UltraShort and Consumer Discretionary 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 Consumer Discretionary. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Consumer Discretionary.
Diversification Opportunities for ProShares UltraShort and Consumer Discretionary
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ProShares and Consumer is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort Utilities and Consumer Discretionary Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Discretionary 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 Consumer Discretionary. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Discretionary has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Consumer Discretionary go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Consumer Discretionary
Considering the 90-day investment horizon ProShares UltraShort is expected to generate 1.01 times less return on investment than Consumer Discretionary. In addition to that, ProShares UltraShort is 1.93 times more volatile than Consumer Discretionary Select. It trades about 0.04 of its total potential returns per unit of risk. Consumer Discretionary Select is currently generating about 0.07 per unit of volatility. If you would invest 14,332 in Consumer Discretionary Select on January 20, 2024 and sell it today you would earn a total of 2,794 from holding Consumer Discretionary Select or generate 19.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraShort Utilities vs. Consumer Discretionary Select
Performance |
| Timeline |
| ProShares UltraShort |
| Consumer Discretionary |
ProShares UltraShort and Consumer Discretionary Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Consumer Discretionary
The main advantage of trading using opposite ProShares UltraShort and Consumer Discretionary positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Consumer Discretionary 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 Consumer Discretionary will offset losses from the drop in Consumer Discretionary's long position.| ProShares UltraShort vs. ProShares Ultra SP500 | ProShares UltraShort vs. HUMANA INC | ProShares UltraShort vs. Aquagold International | ProShares UltraShort vs. Thrivent High Yield |
| Consumer Discretionary vs. Consumer Staples Select | Consumer Discretionary vs. Industrial Select Sector | Consumer Discretionary vs. Materials Select Sector | Consumer Discretionary vs. Health Care Select |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |