Correlation Between ProShares Ultra and KraneShares MSCI

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

Diversification Opportunities for ProShares Ultra and KraneShares MSCI

-0.5

Correlation Coefficient

ProShares Ultra  KraneShares MSCI

Very good diversification

The 3 months correlation between ProShares and KraneShares is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Yen and KraneShares MSCI All in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares MSCI All 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 KraneShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares MSCI All has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and KraneShares MSCI go up and down completely randomly.

Pair Corralation between ProShares Ultra and KraneShares MSCI

Considering the 90-day investment horizon ProShares Ultra Yen is expected to under-perform the KraneShares MSCI. But the etf apears to be less risky and, when comparing its historical volatility, ProShares Ultra Yen is 2.09 times less risky than KraneShares MSCI. The etf trades about -0.06 of its potential returns per unit of risk. The KraneShares MSCI All is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,833  in KraneShares MSCI All on September 2, 2024 and sell it today you would earn a total of  260.00  from holding KraneShares MSCI All or generate 14.18% return on investment over 90 days.

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

ProShares Ultra Yen  vs.  KraneShares MSCI All

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 quite persistent fundamental indicators, ProShares Ultra is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

KraneShares MSCI All

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares MSCI All are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain essential indicators, KraneShares MSCI disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares Ultra and KraneShares MSCI

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

The idea behind ProShares Ultra Yen and KraneShares MSCI All 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.