Correlation Between ProShares UltraShort and Elbit Systems
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Elbit Systems 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 Elbit Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraShort Bloomberg and Elbit Systems, you can compare the effects of market volatilities on ProShares UltraShort and Elbit Systems 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 Elbit Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Elbit Systems.
Diversification Opportunities for ProShares UltraShort and Elbit Systems
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ProShares and Elbit is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort Bloomberg and Elbit Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Systems 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 Bloomberg are associated (or correlated) with Elbit Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elbit Systems has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Elbit Systems go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Elbit Systems
Given the investment horizon of 90 days ProShares UltraShort Bloomberg is expected to generate 6.71 times more return on investment than Elbit Systems. However, ProShares UltraShort is 6.71 times more volatile than Elbit Systems. It trades about 0.09 of its potential returns per unit of risk. Elbit Systems is currently generating about -0.01 per unit of risk. If you would invest 2,934 in ProShares UltraShort Bloomberg on January 24, 2024 and sell it today you would earn a total of 4,285 from holding ProShares UltraShort Bloomberg or generate 146.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 80.65% |
| Values | Daily Returns |
ProShares UltraShort Bloomberg vs. Elbit Systems
Performance |
| Timeline |
| ProShares UltraShort |
| Elbit Systems |
ProShares UltraShort and Elbit Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Elbit Systems
The main advantage of trading using opposite ProShares UltraShort and Elbit Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Elbit Systems 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 Elbit Systems will offset losses from the drop in Elbit Systems' long position.The idea behind ProShares UltraShort Bloomberg and Elbit Systems 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.| Elbit Systems vs. Al Bad Massuot Yitzhak | Elbit Systems vs. Gan Shmuel | Elbit Systems vs. Analyst IMS Investment |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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