Correlation Between ProShares Ultra and IShares Morningstar

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

Diversification Opportunities for ProShares Ultra and IShares Morningstar

-0.88

Correlation Coefficient

ProShares Ultra  IShares Morningstar

Pay attention - limited upside

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

Pair Corralation between ProShares Ultra and IShares Morningstar

Considering the 90-day investment horizon ProShares Ultra Euro is expected to under-perform the IShares Morningstar. In addition to that, ProShares Ultra is 1.43 times more volatile than iShares Morningstar Mid Cap. It trades about -0.13 of its total potential returns per unit of risk. iShares Morningstar Mid Cap is currently generating about 0.26 per unit of volatility. If you would invest  7,310  in iShares Morningstar Mid Cap on September 2, 2024 and sell it today you would earn a total of  893.00  from holding iShares Morningstar Mid Cap or generate 12.22% 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.  iShares Morningstar Mid Cap

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.

iShares Morningstar Mid

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Morningstar Mid Cap are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, IShares Morningstar may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ProShares Ultra and IShares Morningstar

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

The idea behind ProShares Ultra Euro and iShares Morningstar Mid Cap 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.