Correlation Between ProShares Ultra and WisdomTree Bianco

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

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

Diversification Opportunities for ProShares Ultra and WisdomTree Bianco

-0.78

Correlation Coefficient

ProShares Ultra  WisdomTree Bianco

Pay attention - limited upside

The 3 months correlation between ProShares and WisdomTree is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Semiconductors and WisdomTree Bianco Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Bianco Total 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 Semiconductors are associated (or correlated) with WisdomTree Bianco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Bianco Total has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and WisdomTree Bianco go up and down completely randomly.

Pair Corralation between ProShares Ultra and WisdomTree Bianco

Considering the 90-day investment horizon ProShares Ultra Semiconductors is expected to under-perform the WisdomTree Bianco. In addition to that, ProShares Ultra is 14.51 times more volatile than WisdomTree Bianco Total. It trades about -0.05 of its total potential returns per unit of risk. WisdomTree Bianco Total is currently generating about 0.03 per unit of volatility. If you would invest  2,531  in WisdomTree Bianco Total on September 13, 2024 and sell it today you would earn a total of  10.00  from holding WisdomTree Bianco Total or generate 0.4% return on investment over 90 days.

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

ProShares Ultra Semiconductors  vs.  WisdomTree Bianco Total

ProShares Ultra Semi

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Semiconductors are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, ProShares Ultra exhibited solid returns over the last few months and may actually be approaching a breakup point.

WisdomTree Bianco Total

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WisdomTree Bianco Total has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, WisdomTree Bianco is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ProShares Ultra and WisdomTree Bianco

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

The idea behind ProShares Ultra Semiconductors and WisdomTree Bianco Total 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 Commodity Directory module to find actively traded commodities issued by global exchanges.