Correlation Between GM and ProShares Short
Can any of the company-specific risk be diversified away by investing in both GM and ProShares Short 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 GM and ProShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and ProShares Short Dow30, you can compare the effects of market volatilities on GM and ProShares Short 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 GM with a short position of ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and ProShares Short.
Diversification Opportunities for GM and ProShares Short
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and ProShares is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and ProShares Short Dow30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short Dow30 and GM 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 General Motors are associated (or correlated) with ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short Dow30 has no effect on the direction of GM i.e., GM and ProShares Short go up and down completely randomly.
Pair Corralation between GM and ProShares Short
Allowing for the 90-day total investment horizon General Motors is expected to generate 3.88 times more return on investment than ProShares Short. However, GM is 3.88 times more volatile than ProShares Short Dow30. It trades about 0.17 of its potential returns per unit of risk. ProShares Short Dow30 is currently generating about -0.11 per unit of risk. If you would invest 5,627 in General Motors on August 14, 2025 and sell it today you would earn a total of 1,495 from holding General Motors or generate 26.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. ProShares Short Dow30
Performance |
| Timeline |
| General Motors |
| ProShares Short Dow30 |
GM and ProShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and ProShares Short
The main advantage of trading using opposite GM and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, ProShares Short 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 Short will offset losses from the drop in ProShares Short's long position.The idea behind General Motors and ProShares Short Dow30 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.| ProShares Short vs. ProShares Short Russell2000 | ProShares Short vs. Direxion Daily MSCI | ProShares Short vs. Direxion Daily Select | ProShares Short vs. Direxion Daily South |
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 the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |