Correlation Between ProShares UltraShort and Advantis Corp

Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Advantis Corp 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 Advantis Corp 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 Advantis Corp, you can compare the effects of market volatilities on ProShares UltraShort and Advantis Corp 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 Advantis Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Advantis Corp.

Diversification Opportunities for ProShares UltraShort and Advantis Corp

Significant diversification

The 3 months correlation between ProShares and Advantis is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort SP500 and Advantis Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantis Corp 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 Advantis Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantis Corp has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Advantis Corp go up and down completely randomly.

Pair Corralation between ProShares UltraShort and Advantis Corp

If you would invest  3,364  in ProShares UltraShort SP500 on July 5, 2023 and sell it today you would earn a total of  349.00  from holding ProShares UltraShort SP500 or generate 10.37% return on investment over 90 days.

ProShares UltraShort SP500  vs.  Advantis Corp

ProShares UltraShort

ProShares Performance

8 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares UltraShort SP500 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, ProShares UltraShort may actually be approaching a critical reversion point that can send shares even higher in November 2023.

Advantis Corp

Advantis Performance

0 of 100

Over the last 90 days Advantis Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Advantis Corp is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ProShares UltraShort and Advantis Corp

The main advantage of trading using opposite ProShares UltraShort and Advantis Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Advantis Corp 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 Advantis Corp will offset losses from the drop in Advantis Corp's long position.

The idea behind ProShares UltraShort SP500 and Advantis Corp 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.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.