Correlation Between Bank of America and ProShares Ultra
Can any of the company-specific risk be diversified away by investing in both Bank of America 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 Bank of America and ProShares Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and ProShares Ultra Oil, you can compare the effects of market volatilities on Bank of America 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 Bank of America with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and ProShares Ultra.
Diversification Opportunities for Bank of America and ProShares Ultra
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and ProShares is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and ProShares Ultra Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Oil and Bank of America 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 Bank of America 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 Oil has no effect on the direction of Bank of America i.e., Bank of America and ProShares Ultra go up and down completely randomly.
Pair Corralation between Bank of America and ProShares Ultra
Considering the 90-day investment horizon Bank of America is expected to generate 0.6 times more return on investment than ProShares Ultra. However, Bank of America is 1.66 times less risky than ProShares Ultra. It trades about 0.05 of its potential returns per unit of risk. ProShares Ultra Oil is currently generating about 0.02 per unit of risk. If you would invest 3,278 in Bank of America on August 26, 2024 and sell it today you would earn a total of 1,422 from holding Bank of America or generate 43.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. ProShares Ultra Oil
Performance |
| Timeline |
| Bank of America |
| ProShares Ultra Oil |
Bank of America and ProShares Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and ProShares Ultra
The main advantage of trading using opposite Bank of America and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America 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.| Bank of America vs. Toronto Dominion Bank | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| ProShares Ultra vs. Direxion Daily SP | ProShares Ultra vs. Direxion Daily Semiconductor | ProShares Ultra vs. Direxion Daily Semiconductor |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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