Correlation Between ProShares Ultra and Invesco SP
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Invesco SP 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 SP 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 SP 500, you can compare the effects of market volatilities on ProShares Ultra and Invesco SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Invesco SP.
Diversification Opportunities for ProShares Ultra and Invesco SP
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and Invesco is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Oil and Invesco SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP 500 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 SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP 500 has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Invesco SP go up and down completely randomly.
Pair Corralation between ProShares Ultra and Invesco SP
Considering the 90-day investment horizon ProShares Ultra Oil is expected to generate 2.58 times more return on investment than Invesco SP. However, ProShares Ultra is 2.58 times more volatile than Invesco SP 500. It trades about 0.06 of its potential returns per unit of risk. Invesco SP 500 is currently generating about 0.12 per unit of risk. If you would invest 3,724 in ProShares Ultra Oil on August 27, 2024 and sell it today you would earn a total of 923.00 from holding ProShares Ultra Oil or generate 24.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra Oil vs. Invesco SP 500
Performance |
| Timeline |
| ProShares Ultra Oil |
| Invesco SP 500 |
ProShares Ultra and Invesco SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and Invesco SP
The main advantage of trading using opposite ProShares Ultra and Invesco SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, Invesco SP 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 SP will offset losses from the drop in Invesco SP'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 SP vs. Invesco SP 500 | Invesco SP vs. Invesco SP 500 | Invesco SP vs. Invesco SP MidCap | Invesco SP 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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