Correlation Between ProShares Ultra and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and ProShares UltraShort 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 ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Ultra MSCI and ProShares UltraShort Semiconductors, you can compare the effects of market volatilities on ProShares Ultra and ProShares UltraShort 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 ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and ProShares UltraShort.
Diversification Opportunities for ProShares Ultra and ProShares UltraShort
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and ProShares is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra MSCI and ProShares UltraShort Semicondu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort 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 MSCI are associated (or correlated) with ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and ProShares UltraShort go up and down completely randomly.
Pair Corralation between ProShares Ultra and ProShares UltraShort
Considering the 90-day investment horizon ProShares Ultra MSCI is expected to under-perform the ProShares UltraShort. But the etf apears to be less risky and, when comparing its historical volatility, ProShares Ultra MSCI is 1.55 times less risky than ProShares UltraShort. The etf trades about -0.15 of its potential returns per unit of risk. The ProShares UltraShort Semiconductors is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 3,509 in ProShares UltraShort Semiconductors on September 12, 2024 and sell it today you would lose (534.00) from holding ProShares UltraShort Semiconductors or give up 15.22% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
ProShares Ultra MSCI vs. ProShares UltraShort Semicondu
Performance |
Timeline |
ProShares Ultra MSCI |
ProShares UltraShort |
ProShares Ultra and ProShares UltraShort Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ProShares Ultra and ProShares UltraShort
The main advantage of trading using opposite ProShares Ultra and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, ProShares UltraShort 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 UltraShort will offset losses from the drop in ProShares UltraShort's long position.ProShares Ultra vs. Freedom Day Dividend | ProShares Ultra vs. Franklin Templeton ETF | ProShares Ultra vs. iShares MSCI China | ProShares Ultra vs. Tidal Trust II |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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