Correlation Between IShares Core and ProShares UltraPro
Can any of the company-specific risk be diversified away by investing in both IShares Core and ProShares UltraPro 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 IShares Core and ProShares UltraPro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core SP and ProShares UltraPro Short, you can compare the effects of market volatilities on IShares Core and ProShares UltraPro 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 IShares Core with a short position of ProShares UltraPro. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and ProShares UltraPro.
Diversification Opportunities for IShares Core and ProShares UltraPro
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and ProShares is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and ProShares UltraPro Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraPro Short and IShares Core 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 iShares Core SP are associated (or correlated) with ProShares UltraPro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraPro Short has no effect on the direction of IShares Core i.e., IShares Core and ProShares UltraPro go up and down completely randomly.
Pair Corralation between IShares Core and ProShares UltraPro
Considering the 90-day investment horizon IShares Core is expected to generate 1.2 times less return on investment than ProShares UltraPro. But when comparing it to its historical volatility, iShares Core SP is 3.81 times less risky than ProShares UltraPro. It trades about 0.11 of its potential returns per unit of risk. ProShares UltraPro Short is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 5,077 in ProShares UltraPro Short on August 29, 2024 and sell it today you would earn a total of 1,869 from holding ProShares UltraPro Short or generate 36.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core SP vs. ProShares UltraPro Short
Performance |
| Timeline |
| iShares Core SP |
| ProShares UltraPro Short |
IShares Core and ProShares UltraPro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and ProShares UltraPro
The main advantage of trading using opposite IShares Core and ProShares UltraPro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, ProShares UltraPro 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 UltraPro will offset losses from the drop in ProShares UltraPro's long position.| IShares Core vs. iShares Core SP | IShares Core vs. iShares Core SP | IShares Core vs. iShares SP 500 | IShares Core vs. iShares Russell 2000 |
| ProShares UltraPro vs. Direxion Daily 20 | ProShares UltraPro vs. Direxion Daily 7 10 | ProShares UltraPro vs. ProShares Short 20 | ProShares UltraPro vs. ProShares Short 7 10 |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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