Correlation Between MicroSectors Travel and ProShares Ultra
Can any of the company-specific risk be diversified away by investing in both MicroSectors Travel and ProShares Ultra 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 MicroSectors Travel and ProShares Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectors Travel 3X and ProShares Ultra QQQ, you can compare the effects of market volatilities on MicroSectors Travel and ProShares Ultra 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 MicroSectors Travel with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors Travel and ProShares Ultra.
Diversification Opportunities for MicroSectors Travel and ProShares Ultra
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MicroSectors and ProShares is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors Travel 3X and ProShares Ultra QQQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra QQQ and MicroSectors Travel 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 MicroSectors Travel 3X are associated (or correlated) with ProShares Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra QQQ has no effect on the direction of MicroSectors Travel i.e., MicroSectors Travel and ProShares Ultra go up and down completely randomly.
Pair Corralation between MicroSectors Travel and ProShares Ultra
Given the investment horizon of 90 days MicroSectors Travel 3X is expected to under-perform the ProShares Ultra. But the etf apears to be less risky and, when comparing its historical volatility, MicroSectors Travel 3X is 1.21 times less risky than ProShares Ultra. The etf trades about -0.08 of its potential returns per unit of risk. The ProShares Ultra QQQ is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 11,654 in ProShares Ultra QQQ on October 25, 2024 and sell it today you would lose (18.00) from holding ProShares Ultra QQQ or give up 0.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MicroSectors Travel 3X vs. ProShares Ultra QQQ
Performance |
| Timeline |
| MicroSectors Travel |
| ProShares Ultra QQQ |
MicroSectors Travel and ProShares Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors Travel and ProShares Ultra
The main advantage of trading using opposite MicroSectors Travel and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors Travel position performs unexpectedly, ProShares Ultra 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 ProShares Ultra will offset losses from the drop in ProShares Ultra's long position.| MicroSectors Travel vs. MicroSectors Travel 3X | MicroSectors Travel vs. MicroSectors Gold Miners | MicroSectors Travel vs. Direxion Daily Travel | MicroSectors Travel vs. MicroSectors Solactive FANG |
| ProShares Ultra vs. ProShares Ultra SP500 | ProShares Ultra vs. ProShares UltraShort QQQ | ProShares Ultra vs. ProShares Ultra Dow30 | ProShares Ultra vs. ProShares Ultra Russell2000 |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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