Correlation Between ProShares Ultra and Guru Favorite

Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Guru Favorite 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 Guru Favorite 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 Guru Favorite Stocks, you can compare the effects of market volatilities on ProShares Ultra and Guru Favorite 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 Guru Favorite. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Guru Favorite.

Diversification Opportunities for ProShares Ultra and Guru Favorite

-0.88

Correlation Coefficient

ProShares Ultra  Guru Favorite

Pay attention - limited upside

The 3 months correlation between ProShares and Guru is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Euro and Guru Favorite Stocks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guru Favorite Stocks 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 Guru Favorite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guru Favorite Stocks has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Guru Favorite go up and down completely randomly.

Pair Corralation between ProShares Ultra and Guru Favorite

Considering the 90-day investment horizon ProShares Ultra Euro is expected to under-perform the Guru Favorite. In addition to that, ProShares Ultra is 1.24 times more volatile than Guru Favorite Stocks. It trades about -0.12 of its total potential returns per unit of risk. Guru Favorite Stocks is currently generating about 0.16 per unit of volatility. If you would invest  2,976  in Guru Favorite Stocks on August 30, 2024 and sell it today you would earn a total of  244.00  from holding Guru Favorite Stocks or generate 8.2% 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.  Guru Favorite Stocks

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.

Guru Favorite Stocks

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guru Favorite Stocks are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Guru Favorite may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with ProShares Ultra and Guru Favorite

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

The idea behind ProShares Ultra Euro and Guru Favorite Stocks 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..