Correlation Between Bank of America and ProShares Ultra
Can any of the company-specific risk be diversified away by investing in both Bank of America 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 Bank of America and ProShares Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and ProShares Ultra 20, you can compare the effects of market volatilities on Bank of America 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 Bank of America with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and ProShares Ultra.
Diversification Opportunities for Bank of America and ProShares Ultra
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and ProShares is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and ProShares Ultra 20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra 20 and Bank of America 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 Bank of America 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 20 has no effect on the direction of Bank of America i.e., Bank of America and ProShares Ultra go up and down completely randomly.
Pair Corralation between Bank of America and ProShares Ultra
Considering the 90-day investment horizon Bank of America is expected to generate 1.03 times less return on investment than ProShares Ultra. But when comparing it to its historical volatility, Bank of America is 1.87 times less risky than ProShares Ultra. It trades about 0.03 of its potential returns per unit of risk. ProShares Ultra 20 is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,887 in ProShares Ultra 20 on September 12, 2024 and sell it today you would earn a total of 6.00 from holding ProShares Ultra 20 or generate 0.32% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Bank of America vs. ProShares Ultra 20
Performance |
Timeline |
Bank of America |
ProShares Ultra 20 |
Bank of America and ProShares Ultra Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of America and ProShares Ultra
The main advantage of trading using opposite Bank of America and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America 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.Bank of America vs. JPMorgan Chase Co | Bank of America vs. Victory Integrity Smallmid Cap | Bank of America vs. Hilton Worldwide Holdings | Bank of America vs. NVIDIA |
ProShares Ultra vs. Direxion Daily 20 | ProShares Ultra vs. Direxion Daily 7 10 | ProShares Ultra vs. Direxion Daily Real | ProShares Ultra vs. Direxion Daily MSCI |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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