Correlation Between ProShares Ultra and Virtus Reaves
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Virtus Reaves 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 Virtus Reaves 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 Virtus Reaves Utilities, you can compare the effects of market volatilities on ProShares Ultra and Virtus Reaves 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 Virtus Reaves. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Virtus Reaves.
Diversification Opportunities for ProShares Ultra and Virtus Reaves
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and Virtus is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Oil and Virtus Reaves Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Reaves Utilities 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 Virtus Reaves. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Reaves Utilities has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Virtus Reaves go up and down completely randomly.
Pair Corralation between ProShares Ultra and Virtus Reaves
Considering the 90-day investment horizon ProShares Ultra is expected to generate 1.63 times less return on investment than Virtus Reaves. In addition to that, ProShares Ultra is 2.3 times more volatile than Virtus Reaves Utilities. It trades about 0.02 of its total potential returns per unit of risk. Virtus Reaves Utilities is currently generating about 0.08 per unit of volatility. If you would invest 4,515 in Virtus Reaves Utilities on August 25, 2024 and sell it today you would earn a total of 2,390 from holding Virtus Reaves Utilities or generate 52.93% 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. Virtus Reaves Utilities
Performance |
| Timeline |
| ProShares Ultra Oil |
| Virtus Reaves Utilities |
ProShares Ultra and Virtus Reaves Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and Virtus Reaves
The main advantage of trading using opposite ProShares Ultra and Virtus Reaves positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, Virtus Reaves 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 Virtus Reaves will offset losses from the drop in Virtus Reaves' long position.| ProShares Ultra vs. Direxion Daily SP | ProShares Ultra vs. Direxion Daily Semiconductor | ProShares Ultra vs. Direxion Daily Small | ProShares Ultra vs. Direxion Daily Semiconductor |
| Virtus Reaves vs. Invesco DWA Utilities | Virtus Reaves vs. Invesco SP SmallCap | Virtus Reaves vs. First Trust Utilities | Virtus Reaves vs. iShares Global Utilities |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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