Correlation Between ProShares Ultra and Vanguard FTSE
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Vanguard FTSE 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 Vanguard FTSE 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 Vanguard FTSE Developed, you can compare the effects of market volatilities on ProShares Ultra and Vanguard FTSE 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 Vanguard FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Vanguard FTSE.
Diversification Opportunities for ProShares Ultra and Vanguard FTSE
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ProShares and Vanguard is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Oil and Vanguard FTSE Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE Developed 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 Vanguard FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard FTSE Developed has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Vanguard FTSE go up and down completely randomly.
Pair Corralation between ProShares Ultra and Vanguard FTSE
Considering the 90-day investment horizon ProShares Ultra Oil is expected to generate 2.7 times more return on investment than Vanguard FTSE. However, ProShares Ultra is 2.7 times more volatile than Vanguard FTSE Developed. It trades about 0.04 of its potential returns per unit of risk. Vanguard FTSE Developed is currently generating about -0.01 per unit of risk. If you would invest 4,272 in ProShares Ultra Oil on August 25, 2024 and sell it today you would earn a total of 375.00 from holding ProShares Ultra Oil or generate 8.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra Oil vs. Vanguard FTSE Developed
Performance |
| Timeline |
| ProShares Ultra Oil |
| Vanguard FTSE Developed |
ProShares Ultra and Vanguard FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and Vanguard FTSE
The main advantage of trading using opposite ProShares Ultra and Vanguard FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, Vanguard FTSE 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 Vanguard FTSE will offset losses from the drop in Vanguard FTSE'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 |
| Vanguard FTSE vs. Dimensional Core Equity | Vanguard FTSE vs. Dimensional Emerging Core | Vanguard FTSE vs. Dimensional Targeted Value | Vanguard FTSE vs. Dimensional Small Cap |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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