Correlation Between ProShares Ultra and IQ Candriam

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

Diversification Opportunities for ProShares Ultra and IQ Candriam

-0.82

Correlation Coefficient

ProShares Ultra  IQ Candriam

Pay attention - limited upside

The 3 months correlation between ProShares and IQSU is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Euro and IQ Candriam ESG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ Candriam ESG 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 IQ Candriam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ Candriam ESG has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and IQ Candriam go up and down completely randomly.

Pair Corralation between ProShares Ultra and IQ Candriam

Considering the 90-day investment horizon ProShares Ultra Euro is expected to under-perform the IQ Candriam. In addition to that, ProShares Ultra is 1.31 times more volatile than IQ Candriam ESG. It trades about -0.12 of its total potential returns per unit of risk. IQ Candriam ESG is currently generating about 0.13 per unit of volatility. If you would invest  4,688  in IQ Candriam ESG on August 30, 2024 and sell it today you would earn a total of  309.00  from holding IQ Candriam ESG or generate 6.59% 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.  IQ Candriam ESG

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.

IQ Candriam ESG

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IQ Candriam ESG are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, IQ Candriam may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with ProShares Ultra and IQ Candriam

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

The idea behind ProShares Ultra Euro and IQ Candriam ESG 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.