Correlation Between ProShares Ultra and BlueStar Travel

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Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and BlueStar Travel 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 BlueStar Travel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Ultra Dow30 and BlueStar Travel And, you can compare the effects of market volatilities on ProShares Ultra and BlueStar Travel 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 BlueStar Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and BlueStar Travel.

Diversification Opportunities for ProShares Ultra and BlueStar Travel

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between ProShares and BlueStar is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Dow30 and BlueStar Travel And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlueStar Travel And 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 Dow30 are associated (or correlated) with BlueStar Travel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlueStar Travel And has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and BlueStar Travel go up and down completely randomly.
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Pair Corralation between ProShares Ultra and BlueStar Travel

Considering the 90-day investment horizon ProShares Ultra Dow30 is expected to generate 1.16 times more return on investment than BlueStar Travel. However, ProShares Ultra is 1.16 times more volatile than BlueStar Travel And. It trades about 0.07 of its potential returns per unit of risk. BlueStar Travel And is currently generating about 0.07 per unit of risk. If you would invest  6,720  in ProShares Ultra Dow30 on September 3, 2024 and sell it today you would earn a total of  4,002  from holding ProShares Ultra Dow30 or generate 59.55% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

ProShares Ultra Dow30  vs.  BlueStar Travel And

 Performance 
       Timeline  

ProShares Ultra and BlueStar Travel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ProShares Ultra and BlueStar Travel

The main advantage of trading using opposite ProShares Ultra and BlueStar Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, BlueStar Travel 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 BlueStar Travel will offset losses from the drop in BlueStar Travel's long position.
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The idea behind ProShares Ultra Dow30 and BlueStar Travel And pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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