Correlation Between VanEck Junior and ProShares Ultra

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

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

Diversification Opportunities for VanEck Junior and ProShares Ultra

0.92

Correlation Coefficient

VanEck Junior  ProShares Ultra

Almost no diversification

The 3 months correlation between VanEck and ProShares is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Junior Gold and ProShares Ultra Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Gold and VanEck Junior 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 VanEck Junior Gold 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 Gold has no effect on the direction of VanEck Junior i.e., VanEck Junior and ProShares Ultra go up and down completely randomly.

Pair Corralation between VanEck Junior and ProShares Ultra

Given the investment horizon of 90 days VanEck Junior Gold is expected to generate 1.1 times more return on investment than ProShares Ultra. However, VanEck Junior is 1.1 times more volatile than ProShares Ultra Gold. It trades about 0.07 of its potential returns per unit of risk. ProShares Ultra Gold is currently generating about 0.08 per unit of risk. If you would invest  4,370  in VanEck Junior Gold on September 3, 2024 and sell it today you would earn a total of  398.00  from holding VanEck Junior Gold or generate 9.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

VanEck Junior Gold  vs.  ProShares Ultra Gold

VanEck Junior Gold

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Junior Gold are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, VanEck Junior may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ProShares Ultra Gold

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Gold are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, ProShares Ultra may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with VanEck Junior and ProShares Ultra

The main advantage of trading using opposite VanEck Junior and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Junior 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 VanEck Junior Gold and ProShares Ultra Gold 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.