Correlation Between ProShares Ultra and IShares Core
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and IShares Core 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 Core 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 Core SP, you can compare the effects of market volatilities on ProShares Ultra and IShares Core 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 Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and IShares Core.
Diversification Opportunities for ProShares Ultra and IShares Core
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and IShares is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Oil and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP 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 Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core SP has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and IShares Core go up and down completely randomly.
Pair Corralation between ProShares Ultra and IShares Core
Considering the 90-day investment horizon ProShares Ultra Oil is expected to generate 2.75 times more return on investment than IShares Core. However, ProShares Ultra is 2.75 times more volatile than iShares Core SP. It trades about 0.33 of its potential returns per unit of risk. iShares Core SP is currently generating about 0.19 per unit of risk. If you would invest 3,988 in ProShares Ultra Oil on August 25, 2024 and sell it today you would earn a total of 659.00 from holding ProShares Ultra Oil or generate 16.52% 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 Core SP
Performance |
| Timeline |
| ProShares Ultra Oil |
| iShares Core SP |
ProShares Ultra and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and IShares Core
The main advantage of trading using opposite ProShares Ultra and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core's long position.| ProShares Ultra vs. Direxion Daily SP | ProShares Ultra vs. Direxion Daily Semiconductor | ProShares Ultra vs. Direxion Daily Semiconductor |
| IShares Core vs. iShares Core SP | IShares Core vs. iShares Core MSCI | IShares Core vs. iShares Broad USD | IShares Core vs. iShares Core SP |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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