Correlation Between AdvisorShares Ranger and ProShares UltraShort

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

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

Diversification Opportunities for AdvisorShares Ranger and ProShares UltraShort

-0.84

Correlation Coefficient

AdvisorShares Ranger  ProShares UltraShort

Pay attention - limited upside

The 3 months correlation between AdvisorShares and ProShares is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares Ranger Equity and ProShares UltraShort MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort MSCI and AdvisorShares Ranger 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 AdvisorShares Ranger Equity 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 MSCI has no effect on the direction of AdvisorShares Ranger i.e., AdvisorShares Ranger and ProShares UltraShort go up and down completely randomly.

Pair Corralation between AdvisorShares Ranger and ProShares UltraShort

Given the investment horizon of 90 days AdvisorShares Ranger Equity is expected to under-perform the ProShares UltraShort. But the etf apears to be less risky and, when comparing its historical volatility, AdvisorShares Ranger Equity is 2.47 times less risky than ProShares UltraShort. The etf trades about -0.18 of its potential returns per unit of risk. The ProShares UltraShort MSCI is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,223  in ProShares UltraShort MSCI on September 14, 2024 and sell it today you would earn a total of  333.00  from holding ProShares UltraShort MSCI or generate 27.23% return on investment over 90 days.

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

AdvisorShares Ranger Equity  vs.  ProShares UltraShort MSCI

AdvisorShares Ranger

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AdvisorShares Ranger Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

ProShares UltraShort MSCI

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares UltraShort MSCI are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, ProShares UltraShort reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AdvisorShares Ranger and ProShares UltraShort

The main advantage of trading using opposite AdvisorShares Ranger and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdvisorShares Ranger 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 AdvisorShares Ranger Equity and ProShares UltraShort MSCI 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.