Correlation Between Washington Mutual and ProShares Ultra
Can any of the company-specific risk be diversified away by investing in both Washington Mutual 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 Washington Mutual and ProShares Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Mutual Investors and ProShares Ultra Consumer, you can compare the effects of market volatilities on Washington Mutual 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 Washington Mutual with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and ProShares Ultra.
Diversification Opportunities for Washington Mutual and ProShares Ultra
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Washington and ProShares is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and ProShares Ultra Consumer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Consumer and Washington Mutual 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 Washington Mutual Investors 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 Consumer has no effect on the direction of Washington Mutual i.e., Washington Mutual and ProShares Ultra go up and down completely randomly.
Pair Corralation between Washington Mutual and ProShares Ultra
Assuming the 90 days horizon Washington Mutual is expected to generate 2.4 times less return on investment than ProShares Ultra. But when comparing it to its historical volatility, Washington Mutual Investors is 2.93 times less risky than ProShares Ultra. It trades about 0.3 of its potential returns per unit of risk. ProShares Ultra Consumer is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 5,035 in ProShares Ultra Consumer on November 3, 2024 and sell it today you would earn a total of 491.00 from holding ProShares Ultra Consumer or generate 9.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Mutual Investors vs. ProShares Ultra Consumer
Performance |
| Timeline |
| Washington Mutual |
| ProShares Ultra Consumer |
Washington Mutual and ProShares Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and ProShares Ultra
The main advantage of trading using opposite Washington Mutual and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual 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.| Washington Mutual vs. Amg Managers Centersquare | Washington Mutual vs. Tiaa Cref Real Estate | Washington Mutual vs. Deutsche Real Estate | Washington Mutual vs. Tiaa Cref Real Estate |
| ProShares Ultra vs. ProShares Ultra Consumer | ProShares Ultra vs. ProShares Ultra Industrials | ProShares Ultra vs. ProShares Ultra Utilities | ProShares Ultra vs. ProShares Ultra Health |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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