Correlation Between Microsoft and ProShares Ultra
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and ProShares Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and ProShares Ultra SmallCap600, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and ProShares Ultra.
Diversification Opportunities for Microsoft and ProShares Ultra
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and ProShares is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and ProShares Ultra SmallCap600 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Smal and Microsoft 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 Microsoft 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 Smal has no effect on the direction of Microsoft i.e., Microsoft and ProShares Ultra go up and down completely randomly.
Pair Corralation between Microsoft and ProShares Ultra
Given the investment horizon of 90 days Microsoft is expected to generate 19.49 times less return on investment than ProShares Ultra. But when comparing it to its historical volatility, Microsoft is 1.97 times less risky than ProShares Ultra. It trades about 0.02 of its potential returns per unit of risk. ProShares Ultra SmallCap600 is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,667 in ProShares Ultra SmallCap600 on August 29, 2024 and sell it today you would earn a total of 445.00 from holding ProShares Ultra SmallCap600 or generate 16.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. ProShares Ultra SmallCap600
Performance |
| Timeline |
| Microsoft |
| ProShares Ultra Smal |
Microsoft and ProShares Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and ProShares Ultra
The main advantage of trading using opposite Microsoft and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| ProShares Ultra vs. ProShares Ultra MidCap400 | ProShares Ultra vs. ProShares Ultra Industrials | ProShares Ultra vs. ProShares Ultra Consumer | ProShares Ultra vs. ProShares Ultra Consumer |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Stocks Directory Find actively traded stocks across global markets |