Correlation Between ProShares UltraShort and Babcock Wilcox
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Babcock Wilcox 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 Babcock Wilcox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraShort Bloomberg and Babcock Wilcox Enterprises, you can compare the effects of market volatilities on ProShares UltraShort and Babcock Wilcox 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 Babcock Wilcox. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Babcock Wilcox.
Diversification Opportunities for ProShares UltraShort and Babcock Wilcox
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ProShares and Babcock is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort Bloomberg and Babcock Wilcox Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Babcock Wilcox Enter 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 Bloomberg are associated (or correlated) with Babcock Wilcox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Babcock Wilcox Enter has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Babcock Wilcox go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Babcock Wilcox
Given the investment horizon of 90 days ProShares UltraShort Bloomberg is expected to generate 3.75 times more return on investment than Babcock Wilcox. However, ProShares UltraShort is 3.75 times more volatile than Babcock Wilcox Enterprises. It trades about 0.1 of its potential returns per unit of risk. Babcock Wilcox Enterprises is currently generating about -0.06 per unit of risk. If you would invest 7,119 in ProShares UltraShort Bloomberg on January 21, 2024 and sell it today you would earn a total of 100.00 from holding ProShares UltraShort Bloomberg or generate 1.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraShort Bloomberg vs. Babcock Wilcox Enterprises
Performance |
| Timeline |
| ProShares UltraShort |
| Babcock Wilcox Enter |
ProShares UltraShort and Babcock Wilcox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Babcock Wilcox
The main advantage of trading using opposite ProShares UltraShort and Babcock Wilcox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Babcock Wilcox 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 Babcock Wilcox will offset losses from the drop in Babcock Wilcox's long position.The idea behind ProShares UltraShort Bloomberg and Babcock Wilcox Enterprises 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.
| Babcock Wilcox vs. Enerpac Tool Group | Babcock Wilcox vs. Gorman Rupp | Babcock Wilcox vs. Crane Company | Babcock Wilcox vs. Franklin Electric Co |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |