ProShares SP 500 74348TAW2 Bond
| SPXN Etf | USD 64.16 0.42 0.66% |
ProShares' financial leverage is the degree to which the firm utilizes its fixed-income securities and uses equity to finance projects. Companies with high leverage are usually considered to be at financial risk. ProShares' financial risk is the risk to ProShares stockholders that is caused by an increase in debt. In other words, with a high degree of financial leverage come high-interest payments, which usually reduce Earnings Per Share (EPS).
ProShares |
Given the importance of ProShares' capital structure, the first step in the capital decision process is for the management of ProShares to decide how much external capital it will need to raise to operate in a sustainable way. Once the amount of financing is determined, management needs to examine the financial markets to determine the terms in which the company can boost capital. This move is crucial to the process because the market environment may reduce the ability of ProShares SP 500 to issue bonds at a reasonable cost.
| Popular Name | ProShares PSEC 3437 15 OCT 28 |
| Equity ISIN Code | US74347B5738 |
| Bond Issue ISIN Code | US74348TAW27 |
| S&P Rating | Others |
| Maturity Date | Others |
| Issuance Date | Others |
ProShares SP 500 Outstanding Bond Obligations
Understaning ProShares Use of Financial Leverage
Leverage ratios show ProShares' total debt position, including all outstanding obligations. In simple terms, high financial leverage means that the cost of production, along with the day-to-day running of the business, is high. Conversely, lower financial leverage implies lower fixed cost investment in the business, which is generally considered a good sign by investors. The degree of ProShares' financial leverage can be measured in several ways, including ratios such as the debt-to-equity ratio (total debt / total equity), or the debt ratio (total debt / total assets).
Under normal circumstances, the fund will invest at least 80 percent of its total assets in component securities of the index. SP 500 is traded on NYSEARCA Exchange in the United States. Please read more on our technical analysis page.
Pair Trading with ProShares
One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if ProShares position performs unexpectedly, the other equity 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 will appreciate offsetting losses from the drop in the long position's value.Moving together with ProShares Etf
| 0.98 | VTI | Vanguard Total Stock | PairCorr |
| 0.99 | SPY | SPDR SP 500 Aggressive Push | PairCorr |
| 0.99 | IVV | iShares Core SP | PairCorr |
| 0.94 | VIG | Vanguard Dividend | PairCorr |
| 0.99 | VV | Vanguard Large Cap | PairCorr |
Moving against ProShares Etf
| 0.83 | VIIX | VIIX | PairCorr |
| 0.82 | YCL | ProShares Ultra Yen | PairCorr |
| 0.8 | FXY | Invesco CurrencyShares | PairCorr |
| 0.76 | ULE | ProShares Ultra Euro | PairCorr |
The ability to find closely correlated positions to ProShares could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace ProShares when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back ProShares - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling ProShares SP 500 to buy it.
The correlation of ProShares is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as ProShares moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if ProShares SP 500 moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for ProShares can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.Check out the analysis of ProShares Fundamentals Over Time. You can also try the Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
The market value of ProShares SP 500 is measured differently than its book value, which is the value of ProShares that is recorded on the company's balance sheet. Investors also form their own opinion of ProShares' value that differs from its market value or its book value, called intrinsic value, which is ProShares' true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because ProShares' market value can be influenced by many factors that don't directly affect ProShares' underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between ProShares' value and its price as these two are different measures arrived at by different means. Investors typically determine if ProShares is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, ProShares' price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.
What is Financial Leverage?
Financial leverage is the use of borrowed money (debt) to finance the purchase of assets with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing. In most cases, the debt provider will limit how much risk it is ready to take and indicate a limit on the extent of the leverage it will allow. In the case of asset-backed lending, the financial provider uses the assets as collateral until the borrower repays the loan. In the case of a cash flow loan, the general creditworthiness of the company is used to back the loan. The concept of leverage is common in the business world. It is mostly used to boost the returns on equity capital of a company, especially when the business is unable to increase its operating efficiency and returns on total investment. Because earnings on borrowing are higher than the interest payable on debt, the company's total earnings will increase, ultimately boosting stockholders' profits.Leverage and Capital Costs
The debt to equity ratio plays a role in the working average cost of capital (WACC). The overall interest on debt represents the break-even point that must be obtained to profitability in a given venture. Thus, WACC is essentially the average interest an organization owes on the capital it has borrowed for leverage. Let's say equity represents 60% of borrowed capital, and debt is 40%. This results in a financial leverage calculation of 40/60, or 0.6667. The organization owes 10% on all equity and 5% on all debt. That means that the weighted average cost of capital is (.4)(5) + (.6)(10) - or 8%. For every $10,000 borrowed, this organization will owe $800 in interest. Profit must be higher than 8% on the project to offset the cost of interest and justify this leverage.Benefits of Financial Leverage
Leverage provides the following benefits for companies:- Leverage is an essential tool a company's management can use to make the best financing and investment decisions.
- It provides a variety of financing sources by which the firm can achieve its target earnings.
- Leverage is also an essential technique in investing as it helps companies set a threshold for the expansion of business operations. For example, it can be used to recommend restrictions on business expansion once the projected return on additional investment is lower than the cost of debt.