Correlation Between ProShares Ultra and Alpha Architect

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

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

Diversification Opportunities for ProShares Ultra and Alpha Architect

-0.79

Correlation Coefficient

ProShares Ultra  Alpha Architect

Pay attention - limited upside

The 3 months correlation between ProShares and Alpha is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Yen and Alpha Architect ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Architect ETF 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 Yen are associated (or correlated) with Alpha Architect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Architect ETF has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Alpha Architect go up and down completely randomly.

Pair Corralation between ProShares Ultra and Alpha Architect

Considering the 90-day investment horizon ProShares Ultra Yen is expected to generate 1.86 times more return on investment than Alpha Architect. However, ProShares Ultra is 1.86 times more volatile than Alpha Architect ETF. It trades about 0.09 of its potential returns per unit of risk. Alpha Architect ETF is currently generating about 0.04 per unit of risk. If you would invest  2,113  in ProShares Ultra Yen on September 13, 2024 and sell it today you would earn a total of  52.00  from holding ProShares Ultra Yen or generate 2.46% return on investment over 90 days.

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

ProShares Ultra Yen  vs.  Alpha Architect ETF

ProShares Ultra Yen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Ultra Yen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Etf's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the ETF venture institutional investors.

Alpha Architect ETF

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Architect ETF are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Alpha Architect may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ProShares Ultra and Alpha Architect

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

The idea behind ProShares Ultra Yen and Alpha Architect ETF 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.