Correlation Between ProShares UltraShort and YCOM

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

By analyzing existing cross correlation between ProShares UltraShort SmallCap600 and YCOM, you can compare the effects of market volatilities on ProShares UltraShort and YCOM 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 YCOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and YCOM.

Diversification Opportunities for ProShares UltraShort and YCOM

0.0

Correlation Coefficient

ProShares UltraShort  YCOM

Pay attention - limited upside

The 3 months correlation between ProShares and YCOM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort SmallCap6 and YCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YCOM 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 SmallCap600 are associated (or correlated) with YCOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YCOM has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and YCOM go up and down completely randomly.

Pair Corralation between ProShares UltraShort and YCOM

If you would invest (100.00) in YCOM on February 3, 2024 and sell it today you would earn a total of  100.00  from holding YCOM or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

ProShares UltraShort SmallCap6  vs.  YCOM

ProShares UltraShort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares UltraShort SmallCap600 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, ProShares UltraShort is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

YCOM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days YCOM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, YCOM is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ProShares UltraShort and YCOM

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

The idea behind ProShares UltraShort SmallCap600 and YCOM 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.