Correlation Between ProShares Short and Metalpha Technology

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

Diversification Opportunities for ProShares Short and Metalpha Technology

-0.3

Correlation Coefficient

ProShares Short  Metalpha Technology

Very good diversification

The 3 months correlation between ProShares and Metalpha is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Short Financials and Metalpha Technology Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalpha Technology 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 Metalpha Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalpha Technology has no effect on the direction of ProShares Short i.e., ProShares Short and Metalpha Technology go up and down completely randomly.

Pair Corralation between ProShares Short and Metalpha Technology

Considering the 90-day investment horizon ProShares Short Financials is expected to under-perform the Metalpha Technology. But the etf apears to be less risky and, when comparing its historical volatility, ProShares Short Financials is 4.69 times less risky than Metalpha Technology. The etf trades about -0.04 of its potential returns per unit of risk. The Metalpha Technology Holding is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  95.00  in Metalpha Technology Holding on January 25, 2024 and sell it today you would earn a total of  60.00  from holding Metalpha Technology Holding or generate 63.16% return on investment over 90 days.

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

ProShares Short Financials  vs.  Metalpha Technology Holding

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.

Metalpha Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Metalpha Technology Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Metalpha Technology may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with ProShares Short and Metalpha Technology

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

The idea behind ProShares Short Financials and Metalpha Technology Holding 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.