Correlation Between ProShares Ultra and JPMorgan Short

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

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

Diversification Opportunities for ProShares Ultra and JPMorgan Short

-0.37

Correlation Coefficient

ProShares Ultra  JPMorgan Short

Very good diversification

The 3 months correlation between ProShares and JPMorgan is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra QQQ and JPMorgan Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Short Duration and ProShares Ultra 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 ProShares Ultra QQQ are associated (or correlated) with JPMorgan Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Short Duration has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and JPMorgan Short go up and down completely randomly.

Pair Corralation between ProShares Ultra and JPMorgan Short

Considering the 90-day investment horizon ProShares Ultra QQQ is expected to generate 13.88 times more return on investment than JPMorgan Short. However, ProShares Ultra is 13.88 times more volatile than JPMorgan Short Duration. It trades about 0.16 of its potential returns per unit of risk. JPMorgan Short Duration is currently generating about 0.0 per unit of risk. If you would invest  9,482  in ProShares Ultra QQQ on September 12, 2024 and sell it today you would earn a total of  1,783  from holding ProShares Ultra QQQ or generate 18.8% return on investment over 90 days.

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

ProShares Ultra QQQ  vs.  JPMorgan Short Duration

ProShares Ultra QQQ

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra QQQ are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating essential indicators, ProShares Ultra exhibited solid returns over the last few months and may actually be approaching a breakup point.

JPMorgan Short Duration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMorgan Short Duration has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, JPMorgan Short is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with ProShares Ultra and JPMorgan Short

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

The idea behind ProShares Ultra QQQ and JPMorgan Short Duration 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 CEOs Directory module to screen CEOs from public companies around the world.