Correlation Between ProShares Ultra and SPDR Portfolio

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

Diversification Opportunities for ProShares Ultra and SPDR Portfolio

-0.85

Correlation Coefficient

ProShares Ultra  SPDR Portfolio

Pay attention - limited upside

The 3 months correlation between ProShares and SPDR is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Yen and SPDR Portfolio SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio SP 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 SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio SP has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and SPDR Portfolio go up and down completely randomly.

Pair Corralation between ProShares Ultra and SPDR Portfolio

Considering the 90-day investment horizon ProShares Ultra Yen is expected to under-perform the SPDR Portfolio. In addition to that, ProShares Ultra is 2.04 times more volatile than SPDR Portfolio SP. It trades about -0.08 of its total potential returns per unit of risk. SPDR Portfolio SP is currently generating about 0.14 per unit of volatility. If you would invest  6,607  in SPDR Portfolio SP on August 30, 2024 and sell it today you would earn a total of  437.00  from holding SPDR Portfolio SP or generate 6.61% return on investment over 90 days.

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

ProShares Ultra Yen  vs.  SPDR Portfolio SP

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 latest unsteady performance, the Etf's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

SPDR Portfolio SP

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Portfolio SP are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, SPDR Portfolio may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with ProShares Ultra and SPDR Portfolio

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

The idea behind ProShares Ultra Yen and SPDR Portfolio SP 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.