Correlation Between GraniteShares ETF and ProShares Ultra

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

By analyzing existing cross correlation between GraniteShares ETF Trust and ProShares Ultra MSCI, you can compare the effects of market volatilities on GraniteShares ETF 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 GraniteShares ETF with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares ETF and ProShares Ultra.

Diversification Opportunities for GraniteShares ETF and ProShares Ultra

-0.6

Correlation Coefficient

GraniteShares ETF  ProShares Ultra

Excellent diversification

The 3 months correlation between GraniteShares and ProShares is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares ETF Trust and ProShares Ultra MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra MSCI and GraniteShares ETF 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 GraniteShares ETF Trust 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 MSCI has no effect on the direction of GraniteShares ETF i.e., GraniteShares ETF and ProShares Ultra go up and down completely randomly.

Pair Corralation between GraniteShares ETF and ProShares Ultra

Given the investment horizon of 90 days GraniteShares ETF Trust is expected to generate 5.76 times more return on investment than ProShares Ultra. However, GraniteShares ETF is 5.76 times more volatile than ProShares Ultra MSCI. It trades about 0.16 of its potential returns per unit of risk. ProShares Ultra MSCI is currently generating about -0.03 per unit of risk. If you would invest  2,334  in GraniteShares ETF Trust on September 3, 2024 and sell it today you would earn a total of  3,227  from holding GraniteShares ETF Trust or generate 138.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

GraniteShares ETF Trust  vs.  ProShares Ultra MSCI

GraniteShares ETF Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares ETF Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, GraniteShares ETF disclosed solid returns over the last few months and may actually be approaching a breakup point.

ProShares Ultra MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Ultra MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, ProShares Ultra is not utilizing all of its potentials. The recent stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with GraniteShares ETF and ProShares Ultra

The main advantage of trading using opposite GraniteShares ETF and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares ETF 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.

The idea behind GraniteShares ETF Trust and ProShares Ultra MSCI 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 Transaction History module to view history of all your transactions and understand their impact on performance.