Correlation Between ProShares UltraShort and Disney
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Disney 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 Disney 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 Walt Disney, you can compare the effects of market volatilities on ProShares UltraShort and Disney 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 Disney. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Disney.
Diversification Opportunities for ProShares UltraShort and Disney
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and Disney is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort SP500 and Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney 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 Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Disney go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Disney
Considering the 90-day investment horizon ProShares UltraShort SP500 is expected to under-perform the Disney. In addition to that, ProShares UltraShort is 1.08 times more volatile than Walt Disney. It trades about -0.03 of its total potential returns per unit of risk. Walt Disney is currently generating about 0.01 per unit of volatility. If you would invest 11,008 in Walt Disney on January 20, 2024 and sell it today you would earn a total of 235.00 from holding Walt Disney or generate 2.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.58% |
| Values | Daily Returns |
ProShares UltraShort SP500 vs. Walt Disney
Performance |
| Timeline |
| ProShares UltraShort |
| Walt Disney |
ProShares UltraShort and Disney Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Disney
The main advantage of trading using opposite ProShares UltraShort and Disney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Disney 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 Disney will offset losses from the drop in Disney's long position.| ProShares UltraShort vs. ProShares Ultra SP500 | ProShares UltraShort vs. HUMANA INC | ProShares UltraShort vs. Aquagold International | ProShares UltraShort 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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