Correlation Between ProShares Ultra and United States
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and United States 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 United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Ultra Bloomberg and United States Brent, you can compare the effects of market volatilities on ProShares Ultra and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and United States.
Diversification Opportunities for ProShares Ultra and United States
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ProShares and United is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Bloomberg and United States Brent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Brent 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 Bloomberg are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Brent has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and United States go up and down completely randomly.
Pair Corralation between ProShares Ultra and United States
Given the investment horizon of 90 days ProShares Ultra Bloomberg is expected to under-perform the United States. In addition to that, ProShares Ultra is 3.62 times more volatile than United States Brent. It trades about -0.05 of its total potential returns per unit of risk. United States Brent is currently generating about 0.03 per unit of volatility. If you would invest 2,553 in United States Brent on August 31, 2024 and sell it today you would earn a total of 347.00 from holding United States Brent or generate 13.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
ProShares Ultra Bloomberg vs. United States Brent
Performance |
| Timeline |
| ProShares Ultra Bloomberg |
| United States Brent |
ProShares Ultra and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and United States
The main advantage of trading using opposite ProShares Ultra and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| ProShares Ultra vs. United States Brent | ProShares Ultra vs. ProShares K 1 Free | ProShares Ultra vs. Invesco DB Energy | ProShares Ultra vs. Invesco DB Oil |
| United States vs. Invesco DB Oil | United States vs. United States 12 | United States vs. United States Gasoline | United States vs. United States Oil |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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