Correlation Between ProShares Short and Gabelli Global

Can any of the company-specific risk be diversified away by investing in both ProShares Short and Gabelli Global 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 Short and Gabelli Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ProShares Short Financials and Gabelli Global Financial, you can compare the effects of market volatilities on ProShares Short and Gabelli Global 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 Short with a short position of Gabelli Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Short and Gabelli Global.

Diversification Opportunities for ProShares Short and Gabelli Global

-0.91

Correlation Coefficient

ProShares Short  Gabelli Global

Pay attention - limited upside

The 3 months correlation between ProShares and Gabelli is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Short Financials and Gabelli Global Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Global Financial and ProShares Short 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 Short Financials are associated (or correlated) with Gabelli Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Global Financial has no effect on the direction of ProShares Short i.e., ProShares Short and Gabelli Global go up and down completely randomly.

Pair Corralation between ProShares Short and Gabelli Global

Considering the 90-day investment horizon ProShares Short Financials is expected to under-perform the Gabelli Global. In addition to that, ProShares Short is 1.0 times more volatile than Gabelli Global Financial. It trades about -0.02 of its total potential returns per unit of risk. Gabelli Global Financial is currently generating about 0.06 per unit of volatility. If you would invest  979.00  in Gabelli Global Financial on January 27, 2024 and sell it today you would earn a total of  367.00  from holding Gabelli Global Financial or generate 37.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

ProShares Short Financials  vs.  Gabelli Global Financial

ProShares Short Fina

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Short Financials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, ProShares Short is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Gabelli Global Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Global Financial are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Gabelli Global may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with ProShares Short and Gabelli Global

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

The idea behind ProShares Short Financials and Gabelli Global Financial 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.

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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.