Correlation Between International Business and ProShares Short

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

By analyzing existing cross correlation between International Business Machines and ProShares Short Russell2000, you can compare the effects of market volatilities on International Business and ProShares Short 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 International Business with a short position of ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and ProShares Short.

Diversification Opportunities for International Business and ProShares Short

-0.77

Correlation Coefficient

International Business  ProShares Short

Pay attention - limited upside

The 3 months correlation between International and ProShares is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and ProShares Short Russell2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short Russ and International Business 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 International Business Machines are associated (or correlated) with ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short Russ has no effect on the direction of International Business i.e., International Business and ProShares Short go up and down completely randomly.

Pair Corralation between International Business and ProShares Short

Considering the 90-day investment horizon International Business Machines is expected to generate 1.47 times more return on investment than ProShares Short. However, International Business is 1.47 times more volatile than ProShares Short Russell2000. It trades about 0.2 of its potential returns per unit of risk. ProShares Short Russell2000 is currently generating about -0.13 per unit of risk. If you would invest  24,899  in International Business Machines on August 5, 2025 and sell it today you would earn a total of  5,842  from holding International Business Machines or generate 23.46% return on investment over 90 days.

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

International Business Machine  vs.  ProShares Short Russell2000

International Business

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, International Business displayed solid returns over the last few months and may actually be approaching a breakup point.

ProShares Short Russ

Risk-Adjusted Performance

Weakest

Over the last 90 days ProShares Short Russell2000 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with International Business and ProShares Short

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

The idea behind International Business Machines and ProShares Short Russell2000 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.