Correlation Between High-yield Municipal and ProShares Ultra
Can any of the company-specific risk be diversified away by investing in both High-yield Municipal 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 High-yield Municipal and ProShares Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Municipal Fund and ProShares Ultra Yen, you can compare the effects of market volatilities on High-yield Municipal 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 High-yield Municipal with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of High-yield Municipal and ProShares Ultra.
Diversification Opportunities for High-yield Municipal and ProShares Ultra
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between High-yield and ProShares is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and ProShares Ultra Yen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Yen and High-yield Municipal 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 High Yield Municipal Fund 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 Yen has no effect on the direction of High-yield Municipal i.e., High-yield Municipal and ProShares Ultra go up and down completely randomly.
Pair Corralation between High-yield Municipal and ProShares Ultra
Assuming the 90 days horizon High Yield Municipal Fund is expected to generate 0.19 times more return on investment than ProShares Ultra. However, High Yield Municipal Fund is 5.31 times less risky than ProShares Ultra. It trades about 0.14 of its potential returns per unit of risk. ProShares Ultra Yen is currently generating about -0.04 per unit of risk. If you would invest 826.00 in High Yield Municipal Fund on September 6, 2024 and sell it today you would earn a total of 79.00 from holding High Yield Municipal Fund or generate 9.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
High Yield Municipal Fund vs. ProShares Ultra Yen
Performance |
| Timeline |
| High Yield Municipal |
| ProShares Ultra Yen |
High-yield Municipal and ProShares Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High-yield Municipal and ProShares Ultra
The main advantage of trading using opposite High-yield Municipal and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High-yield Municipal 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.| High-yield Municipal vs. High Yield Fund Investor | High-yield Municipal vs. Intermediate Term Tax Free Bond | High-yield Municipal vs. California High Yield Municipal | High-yield Municipal vs. T Rowe Price |
| ProShares Ultra vs. ProShares Ultra Euro | ProShares Ultra vs. ProShares UltraShort Yen | ProShares Ultra vs. ProShares Ultra Telecommunications | ProShares Ultra vs. ProShares Ultra Consumer |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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