Correlation Between ProShares Ultra and Invesco NASDAQ
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Invesco NASDAQ 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 Invesco NASDAQ 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 Invesco NASDAQ Internet, you can compare the effects of market volatilities on ProShares Ultra and Invesco NASDAQ 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 Invesco NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Invesco NASDAQ.
Diversification Opportunities for ProShares Ultra and Invesco NASDAQ
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and Invesco is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Oil and Invesco NASDAQ Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco NASDAQ Internet 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 Invesco NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco NASDAQ Internet has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Invesco NASDAQ go up and down completely randomly.
Pair Corralation between ProShares Ultra and Invesco NASDAQ
Considering the 90-day investment horizon ProShares Ultra Oil is expected to generate 2.29 times more return on investment than Invesco NASDAQ. However, ProShares Ultra is 2.29 times more volatile than Invesco NASDAQ Internet. It trades about 0.31 of its potential returns per unit of risk. Invesco NASDAQ Internet is currently generating about 0.31 per unit of risk. If you would invest 3,827 in ProShares Ultra Oil on August 30, 2024 and sell it today you would earn a total of 603.00 from holding ProShares Ultra Oil or generate 15.76% 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. Invesco NASDAQ Internet
Performance |
| Timeline |
| ProShares Ultra Oil |
| Invesco NASDAQ Internet |
ProShares Ultra and Invesco NASDAQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and Invesco NASDAQ
The main advantage of trading using opposite ProShares Ultra and Invesco NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, Invesco NASDAQ 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 Invesco NASDAQ will offset losses from the drop in Invesco NASDAQ'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 |
| Invesco NASDAQ vs. First Trust Dow | Invesco NASDAQ vs. First Trust NASDAQ 100 Technology | Invesco NASDAQ vs. Global X Social | Invesco NASDAQ vs. Invesco SP SmallCap |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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