Correlation Between ProShares Ultra and Northern Trust
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Northern Trust 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 Northern Trust 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 Northern Trust, you can compare the effects of market volatilities on ProShares Ultra and Northern Trust 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 Northern Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Northern Trust.
Diversification Opportunities for ProShares Ultra and Northern Trust
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and Northern is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Oil and Northern Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Trust 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 Northern Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Trust has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Northern Trust go up and down completely randomly.
Pair Corralation between ProShares Ultra and Northern Trust
Considering the 90-day investment horizon ProShares Ultra Oil is expected to generate 2.75 times more return on investment than Northern Trust. However, ProShares Ultra is 2.75 times more volatile than Northern Trust. It trades about 0.02 of its potential returns per unit of risk. Northern Trust is currently generating about 0.05 per unit of risk. If you would invest 4,162 in ProShares Ultra Oil on August 26, 2024 and sell it today you would earn a total of 485.00 from holding ProShares Ultra Oil or generate 11.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 31.79% |
| Values | Daily Returns |
ProShares Ultra Oil vs. Northern Trust
Performance |
| Timeline |
| ProShares Ultra Oil |
| Northern Trust |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
ProShares Ultra and Northern Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and Northern Trust
The main advantage of trading using opposite ProShares Ultra and Northern Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, Northern Trust 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 Northern Trust will offset losses from the drop in Northern Trust's long position.| ProShares Ultra vs. Direxion Daily SP | ProShares Ultra vs. Direxion Daily Semiconductor | ProShares Ultra vs. Direxion Daily Semiconductor |
| Northern Trust vs. BlackRock ETF Trust | Northern Trust vs. Rbb Fund | Northern Trust vs. Virtus ETF Trust | Northern Trust vs. Amplify CWP Enhanced |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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