Correlation Between MicroSectors Gold and ProShares UltraShort

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Can any of the company-specific risk be diversified away by investing in both MicroSectors Gold and ProShares UltraShort 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 Gold and ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectors Gold Miners and ProShares UltraShort Gold, you can compare the effects of market volatilities on MicroSectors Gold and ProShares UltraShort 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 Gold with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors Gold and ProShares UltraShort.

Diversification Opportunities for MicroSectors Gold and ProShares UltraShort

MicroSectorsProSharesDiversified AwayMicroSectorsProSharesDiversified Away100%
0.96
  Correlation Coefficient

Almost no diversification

The 3 months correlation between MicroSectors and ProShares is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors Gold Miners and ProShares UltraShort Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort Gold and MicroSectors Gold 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 Gold Miners are associated (or correlated) with ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort Gold has no effect on the direction of MicroSectors Gold i.e., MicroSectors Gold and ProShares UltraShort go up and down completely randomly.

Pair Corralation between MicroSectors Gold and ProShares UltraShort

Given the investment horizon of 90 days MicroSectors Gold Miners is expected to generate 2.78 times more return on investment than ProShares UltraShort. However, MicroSectors Gold is 2.78 times more volatile than ProShares UltraShort Gold. It trades about -0.01 of its potential returns per unit of risk. ProShares UltraShort Gold is currently generating about -0.12 per unit of risk. If you would invest  1,055  in MicroSectors Gold Miners on December 4, 2024 and sell it today you would lose (39.00) from holding MicroSectors Gold Miners or give up 3.7% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy95.24%
ValuesDaily Returns

MicroSectors Gold Miners  vs.  ProShares UltraShort Gold

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -30-20-100102030
JavaScript chart by amCharts 3.21.15GDXD GLL
       Timeline  
MicroSectors Gold Miners 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days MicroSectors Gold Miners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.
JavaScript chart by amCharts 3.21.15JanFebFebMar1012141618
ProShares UltraShort Gold 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days ProShares UltraShort Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Etf's essential indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the ETF venture institutional investors.
JavaScript chart by amCharts 3.21.15JanFebMarFebMar14.51515.51616.51717.518

MicroSectors Gold and ProShares UltraShort Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-9.2-6.89-4.58-2.270.02.224.436.658.87 0.020.040.060.08
JavaScript chart by amCharts 3.21.15GDXD GLL
       Returns  

Pair Trading with MicroSectors Gold and ProShares UltraShort

The main advantage of trading using opposite MicroSectors Gold and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors Gold position performs unexpectedly, ProShares UltraShort 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 UltraShort will offset losses from the drop in ProShares UltraShort's long position.
The idea behind MicroSectors Gold Miners and ProShares UltraShort Gold pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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