Correlation Between ProShares UltraShort and AXS TSLA

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

By analyzing existing cross correlation between ProShares UltraShort SP500 and AXS TSLA Bear, you can compare the effects of market volatilities on ProShares UltraShort and AXS TSLA 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 AXS TSLA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and AXS TSLA.

Diversification Opportunities for ProShares UltraShort and AXS TSLA

0.74

Correlation Coefficient

ProShares UltraShort  AXS TSLA

Poor diversification

The 3 months correlation between ProShares and AXS is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort SP500 and AXS TSLA Bear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXS TSLA Bear 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 SP500 are associated (or correlated) with AXS TSLA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXS TSLA Bear has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and AXS TSLA go up and down completely randomly.

Pair Corralation between ProShares UltraShort and AXS TSLA

Considering the 90-day investment horizon ProShares UltraShort SP500 is expected to generate 0.16 times more return on investment than AXS TSLA. However, ProShares UltraShort SP500 is 6.13 times less risky than AXS TSLA. It trades about -0.08 of its potential returns per unit of risk. AXS TSLA Bear is currently generating about -0.16 per unit of risk. If you would invest  2,144  in ProShares UltraShort SP500 on August 23, 2024 and sell it today you would lose (170.00) from holding ProShares UltraShort SP500 or give up 7.93% of portfolio value over 90 days.

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

ProShares UltraShort SP500  vs.  AXS TSLA Bear

ProShares UltraShort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares UltraShort SP500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

AXS TSLA Bear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AXS TSLA Bear has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Etf's essential indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.

Pair Trading with ProShares UltraShort and AXS TSLA

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

The idea behind ProShares UltraShort SP500 and AXS TSLA Bear 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.