Correlation Between ProShares UltraShort and GE Aerospace
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and GE Aerospace 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 GE Aerospace 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 GE Aerospace, you can compare the effects of market volatilities on ProShares UltraShort and GE Aerospace 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 GE Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and GE Aerospace.
Diversification Opportunities for ProShares UltraShort and GE Aerospace
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and GE Aerospace is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort SP500 and GE Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE Aerospace 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 GE Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE Aerospace has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and GE Aerospace go up and down completely randomly.
Pair Corralation between ProShares UltraShort and GE Aerospace
Considering the 90-day investment horizon ProShares UltraShort SP500 is expected to under-perform the GE Aerospace. In addition to that, ProShares UltraShort is 1.23 times more volatile than GE Aerospace. It trades about -0.03 of its total potential returns per unit of risk. GE Aerospace is currently generating about 0.14 per unit of volatility. If you would invest 4,848 in GE Aerospace on January 25, 2024 and sell it today you would earn a total of 11,105 from holding GE Aerospace or generate 229.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
ProShares UltraShort SP500 vs. GE Aerospace
Performance |
| Timeline |
| ProShares UltraShort |
| GE Aerospace |
ProShares UltraShort and GE Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and GE Aerospace
The main advantage of trading using opposite ProShares UltraShort and GE Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, GE Aerospace 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 GE Aerospace will offset losses from the drop in GE Aerospace's long position.| ProShares UltraShort vs. Direxion Daily Semiconductor | ProShares UltraShort vs. Direxion Daily SP | 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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