Correlation Between Wave Life and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both Wave Life and ProShares UltraShort 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 Wave Life and ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wave Life Sciences and ProShares UltraShort Bloomberg, you can compare the effects of market volatilities on Wave Life and ProShares UltraShort 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 Wave Life with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wave Life and ProShares UltraShort.
Diversification Opportunities for Wave Life and ProShares UltraShort
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Wave and ProShares is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Wave Life Sciences and ProShares UltraShort Bloomberg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort and Wave Life 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 Wave Life Sciences are associated (or correlated) with ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort has no effect on the direction of Wave Life i.e., Wave Life and ProShares UltraShort go up and down completely randomly.
Pair Corralation between Wave Life and ProShares UltraShort
Considering the 90-day investment horizon Wave Life Sciences is expected to under-perform the ProShares UltraShort. In addition to that, Wave Life is 2.47 times more volatile than ProShares UltraShort Bloomberg. It trades about -0.13 of its total potential returns per unit of risk. ProShares UltraShort Bloomberg is currently generating about -0.14 per unit of volatility. If you would invest 1,640 in ProShares UltraShort Bloomberg on January 26, 2024 and sell it today you would lose (78.00) from holding ProShares UltraShort Bloomberg or give up 4.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Wave Life Sciences vs. ProShares UltraShort Bloomberg
Performance |
| Timeline |
| Wave Life Sciences |
| ProShares UltraShort |
Wave Life and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wave Life and ProShares UltraShort
The main advantage of trading using opposite Wave Life and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wave Life position performs unexpectedly, ProShares UltraShort 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 ProShares UltraShort will offset losses from the drop in ProShares UltraShort's long position.| Wave Life vs. Arrowhead Pharmaceuticals | Wave Life vs. CytomX Therapeutics | Wave Life vs. Assembly Biosciences | Wave Life vs. Apellis Pharmaceuticals |
| ProShares UltraShort vs. ProShares Ultra Bloomberg | ProShares UltraShort vs. Direxion Daily Semiconductor | ProShares UltraShort vs. MicroSectors Big Oil | 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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