Correlation Between SPDR Dow and ProShares Ultra
Can any of the company-specific risk be diversified away by investing in both SPDR Dow 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 SPDR Dow and ProShares Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Dow Jones and ProShares Ultra QQQ, you can compare the effects of market volatilities on SPDR Dow 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 SPDR Dow with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Dow and ProShares Ultra.
Diversification Opportunities for SPDR Dow and ProShares Ultra
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SPDR and ProShares is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Dow Jones and ProShares Ultra QQQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra QQQ and SPDR Dow 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 SPDR Dow Jones 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 QQQ has no effect on the direction of SPDR Dow i.e., SPDR Dow and ProShares Ultra go up and down completely randomly.
Pair Corralation between SPDR Dow and ProShares Ultra
Considering the 90-day investment horizon SPDR Dow is expected to generate 3.74 times less return on investment than ProShares Ultra. But when comparing it to its historical volatility, SPDR Dow Jones is 3.16 times less risky than ProShares Ultra. It trades about 0.09 of its potential returns per unit of risk. ProShares Ultra QQQ is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,093 in ProShares Ultra QQQ on October 20, 2024 and sell it today you would earn a total of 7,126 from holding ProShares Ultra QQQ or generate 174.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Dow Jones vs. ProShares Ultra QQQ
Performance |
| Timeline |
| SPDR Dow Jones |
| ProShares Ultra QQQ |
SPDR Dow and ProShares Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Dow and ProShares Ultra
The main advantage of trading using opposite SPDR Dow and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Dow 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.| SPDR Dow vs. iShares Russell 2000 | SPDR Dow vs. SPDR SP 500 | SPDR Dow vs. Financial Select Sector | SPDR Dow vs. Invesco QQQ Trust |
| ProShares Ultra vs. ProShares Ultra SP500 | ProShares Ultra vs. ProShares UltraShort QQQ | ProShares Ultra vs. ProShares Ultra Dow30 | ProShares Ultra vs. ProShares Ultra Russell2000 |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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