Correlation Between Abrdn Bloomberg and ProShares UltraShort

Can any of the company-specific risk be diversified away by investing in both Abrdn Bloomberg 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 Abrdn Bloomberg and ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between abrdn Bloomberg All and ProShares UltraShort Technology, you can compare the effects of market volatilities on Abrdn Bloomberg 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 Abrdn Bloomberg with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abrdn Bloomberg and ProShares UltraShort.

Diversification Opportunities for Abrdn Bloomberg and ProShares UltraShort

0.29

Correlation Coefficient

Abrdn Bloomberg  ProShares UltraShort

Modest diversification

The 3 months correlation between Abrdn and ProShares is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding abrdn Bloomberg All and ProShares UltraShort Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort and Abrdn Bloomberg 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 abrdn Bloomberg All 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 Abrdn Bloomberg i.e., Abrdn Bloomberg and ProShares UltraShort go up and down completely randomly.

Pair Corralation between Abrdn Bloomberg and ProShares UltraShort

Considering the 90-day investment horizon Abrdn Bloomberg is expected to generate 9.75 times less return on investment than ProShares UltraShort. But when comparing it to its historical volatility, abrdn Bloomberg All is 5.11 times less risky than ProShares UltraShort. It trades about 0.02 of its potential returns per unit of risk. ProShares UltraShort Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,426  in ProShares UltraShort Technology on February 4, 2024 and sell it today you would earn a total of  17.01  from holding ProShares UltraShort Technology or generate 1.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

abrdn Bloomberg All  vs.  ProShares UltraShort Technolog

abrdn Bloomberg All

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in abrdn Bloomberg All are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent fundamental indicators, Abrdn Bloomberg may actually be approaching a critical reversion point that can send shares even higher in June 2024.

ProShares UltraShort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares UltraShort Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, ProShares UltraShort is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Abrdn Bloomberg and ProShares UltraShort

The main advantage of trading using opposite Abrdn Bloomberg and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abrdn Bloomberg 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.

The idea behind abrdn Bloomberg All and ProShares UltraShort Technology 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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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.