Correlation Between BlackRock Capital and ProShares UltraShort

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

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

Diversification Opportunities for BlackRock Capital and ProShares UltraShort

-0.94

Correlation Coefficient

BlackRock Capital  ProShares UltraShort

Pay attention - limited upside

The 3 months correlation between BlackRock and ProShares is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Capital Allocation and ProShares UltraShort SmallCap6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort and BlackRock Capital 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 BlackRock Capital Allocation are associated (or correlated) with ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort has no effect on the direction of BlackRock Capital i.e., BlackRock Capital and ProShares UltraShort go up and down completely randomly.

Pair Corralation between BlackRock Capital and ProShares UltraShort

Given the investment horizon of 90 days BlackRock Capital Allocation is expected to generate 0.27 times more return on investment than ProShares UltraShort. However, BlackRock Capital Allocation is 3.65 times less risky than ProShares UltraShort. It trades about 0.15 of its potential returns per unit of risk. ProShares UltraShort SmallCap600 is currently generating about -0.07 per unit of risk. If you would invest  1,394  in BlackRock Capital Allocation on May 4, 2025 and sell it today you would earn a total of  87.00  from holding BlackRock Capital Allocation or generate 6.24% return on investment over 90 days.

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

BlackRock Capital Allocation  vs.  ProShares UltraShort SmallCap6

BlackRock Capital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Capital Allocation are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BlackRock Capital is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

ProShares UltraShort

Risk-Adjusted Performance

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 latest weak performance, the Etf's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with BlackRock Capital and ProShares UltraShort

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

The idea behind BlackRock Capital Allocation and ProShares UltraShort SmallCap600 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.