Correlation Between ProShares Ultra and ALPS Sector
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and ALPS Sector 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 ALPS Sector 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 ALPS Sector Dividend, you can compare the effects of market volatilities on ProShares Ultra and ALPS Sector 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 ALPS Sector. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and ALPS Sector.
Diversification Opportunities for ProShares Ultra and ALPS Sector
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and ALPS is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Oil and ALPS Sector Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALPS Sector Dividend 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 ALPS Sector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALPS Sector Dividend has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and ALPS Sector go up and down completely randomly.
Pair Corralation between ProShares Ultra and ALPS Sector
Considering the 90-day investment horizon ProShares Ultra Oil is expected to generate 2.79 times more return on investment than ALPS Sector. However, ProShares Ultra is 2.79 times more volatile than ALPS Sector Dividend. It trades about 0.31 of its potential returns per unit of risk. ALPS Sector Dividend is currently generating about 0.11 per unit of risk. If you would invest 4,003 in ProShares Ultra Oil on August 24, 2024 and sell it today you would earn a total of 632.00 from holding ProShares Ultra Oil or generate 15.79% 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. ALPS Sector Dividend
Performance |
| Timeline |
| ProShares Ultra Oil |
| ALPS Sector Dividend |
ProShares Ultra and ALPS Sector Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and ALPS Sector
The main advantage of trading using opposite ProShares Ultra and ALPS Sector positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, ALPS Sector 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 ALPS Sector will offset losses from the drop in ALPS Sector'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 |
| ALPS Sector vs. ALPS International Sector | ALPS Sector vs. WisdomTree SmallCap Dividend | ALPS Sector vs. WisdomTree MidCap Dividend | ALPS Sector vs. Invesco SP Ultra |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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