Correlation Between MegaShort and MegaShort

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

By analyzing existing cross correlation between MegaShort 20 Year and MegaShort SP 500, you can compare the effects of market volatilities on MegaShort and MegaShort 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 MegaShort with a short position of MegaShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of MegaShort and MegaShort.

Diversification Opportunities for MegaShort and MegaShort

0.0

Correlation Coefficient

MegaShort  MegaShort

Pay attention - limited upside

The 3 months correlation between MegaShort and MegaShort is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MegaShort 20 Year and MegaShort SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MegaShort SP 500 and MegaShort 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 MegaShort 20 Year are associated (or correlated) with MegaShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MegaShort SP 500 has no effect on the direction of MegaShort i.e., MegaShort and MegaShort go up and down completely randomly.

Pair Corralation between MegaShort and MegaShort

If you would invest (100.00) in MegaShort 20 Year on April 17, 2025 and sell it today you would earn a total of  100.00  from holding MegaShort 20 Year or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

MegaShort 20 Year  vs.  MegaShort SP 500

MegaShort 20 Year

Risk-Adjusted Performance

Very Weak

Over the last 90 days MegaShort 20 Year has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, MegaShort is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

MegaShort SP 500

Risk-Adjusted Performance

Very Weak

Over the last 90 days MegaShort SP 500 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 very healthy which may send shares a bit higher in August 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with MegaShort and MegaShort

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

The idea behind MegaShort 20 Year and MegaShort SP 500 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.