Correlation Between ProShares UltraShort and DSJA

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

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

Diversification Opportunities for ProShares UltraShort and DSJA

0.83

Correlation Coefficient

ProShares UltraShort  DSJA

Very poor diversification

The 3 months correlation between ProShares and DSJA is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort Yen and DSJA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DSJA 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 Yen are associated (or correlated) with DSJA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DSJA has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and DSJA go up and down completely randomly.

Pair Corralation between ProShares UltraShort and DSJA

If you would invest  3,802  in ProShares UltraShort Yen on September 17, 2024 and sell it today you would earn a total of  748.13  from holding ProShares UltraShort Yen or generate 19.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	3.08%
Values	Daily Returns

ProShares UltraShort Yen  vs.  DSJA

ProShares UltraShort Yen

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares UltraShort Yen are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating fundamental indicators, ProShares UltraShort unveiled solid returns over the last few months and may actually be approaching a breakup point.

DSJA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DSJA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking indicators, DSJA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ProShares UltraShort and DSJA

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

The idea behind ProShares UltraShort Yen and DSJA 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.