Correlation Between ProShares UltraShort and Enterprise
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Enterprise 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 Enterprise 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 Enterprise Group, you can compare the effects of market volatilities on ProShares UltraShort and Enterprise 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 Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Enterprise.
Diversification Opportunities for ProShares UltraShort and Enterprise
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and Enterprise is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort Utilities and Enterprise Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enterprise Group 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 Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enterprise Group has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Enterprise go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Enterprise
Considering the 90-day investment horizon ProShares UltraShort Utilities is expected to under-perform the Enterprise. But the etf apears to be less risky and, when comparing its historical volatility, ProShares UltraShort Utilities is 3.53 times less risky than Enterprise. The etf trades about -0.13 of its potential returns per unit of risk. The Enterprise Group is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 62.00 in Enterprise Group on January 25, 2024 and sell it today you would earn a total of 19.00 from holding Enterprise Group or generate 30.65% 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. Enterprise Group
Performance |
| Timeline |
| ProShares UltraShort |
| Enterprise Group |
ProShares UltraShort and Enterprise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Enterprise
The main advantage of trading using opposite ProShares UltraShort and Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Enterprise 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 Enterprise will offset losses from the drop in Enterprise's long position.The idea behind ProShares UltraShort Utilities and Enterprise Group 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.| Enterprise vs. Vertical Aerospace | Enterprise vs. Rolls Royce Holdings plc | Enterprise vs. Embraer SA ADR | Enterprise vs. Rocket Lab USA |
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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