Correlation Between ProShares Ultra and IShares Morningstar
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and IShares Morningstar 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 IShares Morningstar 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 iShares Morningstar Mid Cap, you can compare the effects of market volatilities on ProShares Ultra and IShares Morningstar 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 IShares Morningstar. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and IShares Morningstar.
Diversification Opportunities for ProShares Ultra and IShares Morningstar
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and IShares is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Oil and iShares Morningstar Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Morningstar Mid 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 IShares Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Morningstar Mid has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and IShares Morningstar go up and down completely randomly.
Pair Corralation between ProShares Ultra and IShares Morningstar
Considering the 90-day investment horizon ProShares Ultra is expected to generate 1.05 times less return on investment than IShares Morningstar. In addition to that, ProShares Ultra is 2.96 times more volatile than iShares Morningstar Mid Cap. It trades about 0.02 of its total potential returns per unit of risk. iShares Morningstar Mid Cap is currently generating about 0.07 per unit of volatility. If you would invest 6,107 in iShares Morningstar Mid Cap on August 26, 2024 and sell it today you would earn a total of 1,924 from holding iShares Morningstar Mid Cap or generate 31.5% 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. iShares Morningstar Mid Cap
Performance |
| Timeline |
| ProShares Ultra Oil |
| iShares Morningstar Mid |
ProShares Ultra and IShares Morningstar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and IShares Morningstar
The main advantage of trading using opposite ProShares Ultra and IShares Morningstar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, IShares Morningstar 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 IShares Morningstar will offset losses from the drop in IShares Morningstar's long position.| ProShares Ultra vs. Direxion Daily SP | ProShares Ultra vs. Direxion Daily Semiconductor | ProShares Ultra vs. Direxion Daily Semiconductor |
| IShares Morningstar vs. SPDR SP 400 | IShares Morningstar vs. Invesco High Yield | IShares Morningstar vs. SPDR Russell 1000 |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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