Correlation Between ProShares Ultra and AdvisorShares Focused

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

By analyzing existing cross correlation between ProShares Ultra Euro and AdvisorShares Focused Equity, you can compare the effects of market volatilities on ProShares Ultra and AdvisorShares Focused 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 AdvisorShares Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and AdvisorShares Focused.

Diversification Opportunities for ProShares Ultra and AdvisorShares Focused

-0.8

Correlation Coefficient

ProShares Ultra  AdvisorShares Focused

Pay attention - limited upside

The 3 months correlation between ProShares and AdvisorShares is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Euro and AdvisorShares Focused Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares Focused 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 Euro are associated (or correlated) with AdvisorShares Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares Focused has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and AdvisorShares Focused go up and down completely randomly.

Pair Corralation between ProShares Ultra and AdvisorShares Focused

Considering the 90-day investment horizon ProShares Ultra Euro is expected to under-perform the AdvisorShares Focused. In addition to that, ProShares Ultra is 1.51 times more volatile than AdvisorShares Focused Equity. It trades about -0.15 of its total potential returns per unit of risk. AdvisorShares Focused Equity is currently generating about 0.16 per unit of volatility. If you would invest  6,671  in AdvisorShares Focused Equity on September 3, 2024 and sell it today you would earn a total of  485.00  from holding AdvisorShares Focused Equity or generate 7.27% return on investment over 90 days.

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

ProShares Ultra Euro  vs.  AdvisorShares Focused Equity

ProShares Ultra Euro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Ultra Euro has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Etf's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

AdvisorShares Focused

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AdvisorShares Focused Equity are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, AdvisorShares Focused may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ProShares Ultra and AdvisorShares Focused

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

The idea behind ProShares Ultra Euro and AdvisorShares Focused Equity 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.