Correlation Between ProShares Ultra and AOT Growth
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and AOT Growth 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 AOT Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Ultra Oil and AOT Growth and, you can compare the effects of market volatilities on ProShares Ultra and AOT Growth 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 AOT Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and AOT Growth.
Diversification Opportunities for ProShares Ultra and AOT Growth
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and AOT is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Oil and AOT Growth and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AOT Growth 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 Oil are associated (or correlated) with AOT Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AOT Growth has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and AOT Growth go up and down completely randomly.
Pair Corralation between ProShares Ultra and AOT Growth
Considering the 90-day investment horizon ProShares Ultra is expected to generate 2.67 times less return on investment than AOT Growth. In addition to that, ProShares Ultra is 1.7 times more volatile than AOT Growth and. It trades about 0.02 of its total potential returns per unit of risk. AOT Growth and is currently generating about 0.1 per unit of volatility. If you would invest 2,331 in AOT Growth and on August 26, 2024 and sell it today you would earn a total of 2,317 from holding AOT Growth and or generate 99.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra Oil vs. AOT Growth and
Performance |
| Timeline |
| ProShares Ultra Oil |
| AOT Growth |
ProShares Ultra and AOT Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and AOT Growth
The main advantage of trading using opposite ProShares Ultra and AOT Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, AOT Growth 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 AOT Growth will offset losses from the drop in AOT Growth's long position.| ProShares Ultra vs. ProShares UltraShort Oil | ProShares Ultra vs. ProShares Ultra Basic | ProShares Ultra vs. ProShares Ultra Financials | ProShares Ultra vs. ProShares Ultra Real |
| AOT Growth vs. Global X NASDAQ | AOT Growth vs. Invesco ESG NASDAQ | AOT Growth vs. ClearBridge Large Cap | AOT Growth vs. AdvisorShares Dorsey Wright |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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