Correlation Between ATT and ProShares Ultra

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Can any of the company-specific risk be diversified away by investing in both ATT and ProShares Ultra 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 ATT and ProShares Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and ProShares Ultra VIX, you can compare the effects of market volatilities on ATT and ProShares Ultra 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 ATT with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and ProShares Ultra.

Diversification Opportunities for ATT and ProShares Ultra

-0.89
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between ATT and ProShares is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and ProShares Ultra VIX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra VIX and ATT 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 ATT Inc are associated (or correlated) with ProShares Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra VIX has no effect on the direction of ATT i.e., ATT and ProShares Ultra go up and down completely randomly.

Pair Corralation between ATT and ProShares Ultra

Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.22 times more return on investment than ProShares Ultra. However, ATT Inc is 4.6 times less risky than ProShares Ultra. It trades about 0.01 of its potential returns per unit of risk. ProShares Ultra VIX is currently generating about -0.04 per unit of risk. If you would invest  1,893  in ATT Inc on September 8, 2022 and sell it today you would earn a total of  37.00  from holding ATT Inc or generate 1.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

ATT Inc  vs.  ProShares Ultra VIX

 Performance (%) 
       Timeline  
ATT Inc 
ATT Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, ATT unveiled solid returns over the last few months and may actually be approaching a breakup point.

ATT Price Channel

ProShares Ultra VIX 
ProShares Performance
0 of 100
Over the last 90 days ProShares Ultra VIX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in January 2023. The current disturbance may also be a sign of long term up-swing for the ETF investors.

ProShares Price Channel

ATT and ProShares Ultra Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ATT and ProShares Ultra

The main advantage of trading using opposite ATT and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, ProShares Ultra 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 Ultra will offset losses from the drop in ProShares Ultra's long position.
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The idea behind ATT Inc and ProShares Ultra VIX 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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Check out your portfolio center. 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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