Correlation Between ProShares UltraShort and Alcoa Corp
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Alcoa Corp 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 Alcoa Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraShort SP500 and Alcoa Corp, you can compare the effects of market volatilities on ProShares UltraShort and Alcoa Corp 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 Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Alcoa Corp.
Diversification Opportunities for ProShares UltraShort and Alcoa Corp
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ProShares and Alcoa is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort SP500 and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp 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 SP500 are associated (or correlated) with Alcoa Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcoa Corp has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Alcoa Corp go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Alcoa Corp
Considering the 90-day investment horizon ProShares UltraShort SP500 is expected to generate 0.63 times more return on investment than Alcoa Corp. However, ProShares UltraShort SP500 is 1.58 times less risky than Alcoa Corp. It trades about -0.03 of its potential returns per unit of risk. Alcoa Corp is currently generating about -0.02 per unit of risk. If you would invest 4,068 in ProShares UltraShort SP500 on January 17, 2024 and sell it today you would lose (1,386) from holding ProShares UltraShort SP500 or give up 34.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
ProShares UltraShort SP500 vs. Alcoa Corp
Performance |
| Timeline |
| ProShares UltraShort |
| Alcoa Corp |
ProShares UltraShort and Alcoa Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Alcoa Corp
The main advantage of trading using opposite ProShares UltraShort and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Alcoa Corp 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 Alcoa Corp will offset losses from the drop in Alcoa Corp's long position.| ProShares UltraShort vs. ProShares UltraShort QQQ | ProShares UltraShort vs. ProShares UltraShort Dow30 | ProShares UltraShort vs. ProShares Ultra SP500 | ProShares UltraShort vs. ProShares Short SP500 |
| Alcoa Corp vs. China Hongqiao Group | Alcoa Corp vs. Norsk Hydro ASA | Alcoa Corp vs. Aquagold International | Alcoa Corp vs. Thrivent High Yield |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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