Correlation Between WisdomTree Managed and ProShares Ultra

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

By analyzing existing cross correlation between WisdomTree Managed Futures and ProShares Ultra MSCI, you can compare the effects of market volatilities on WisdomTree Managed and ProShares Ultra 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 WisdomTree Managed with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Managed and ProShares Ultra.

Diversification Opportunities for WisdomTree Managed and ProShares Ultra

-0.48

Correlation Coefficient

WisdomTree Managed  ProShares Ultra

Very good diversification

The 3 months correlation between WisdomTree and ProShares is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Managed Futures and ProShares Ultra MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra MSCI and WisdomTree Managed 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 WisdomTree Managed Futures are associated (or correlated) with ProShares Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra MSCI has no effect on the direction of WisdomTree Managed i.e., WisdomTree Managed and ProShares Ultra go up and down completely randomly.

Pair Corralation between WisdomTree Managed and ProShares Ultra

Given the investment horizon of 90 days WisdomTree Managed Futures is expected to generate 0.38 times more return on investment than ProShares Ultra. However, WisdomTree Managed Futures is 2.65 times less risky than ProShares Ultra. It trades about 0.08 of its potential returns per unit of risk. ProShares Ultra MSCI is currently generating about 0.02 per unit of risk. If you would invest  3,462  in WisdomTree Managed Futures on September 1, 2024 and sell it today you would earn a total of  142.00  from holding WisdomTree Managed Futures or generate 4.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

WisdomTree Managed Futures  vs.  ProShares Ultra MSCI

WisdomTree Managed

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Managed Futures are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, WisdomTree Managed is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

ProShares Ultra MSCI

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra MSCI are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, ProShares Ultra is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with WisdomTree Managed and ProShares Ultra

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

The idea behind WisdomTree Managed Futures and ProShares Ultra MSCI 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.