Correlation Between MicroSectorsTM Oil and ProShares Ultra
Can any of the company-specific risk be diversified away by investing in both MicroSectorsTM Oil 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 MicroSectorsTM Oil and ProShares Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectorsTM Oil Gas and ProShares Ultra SP500, you can compare the effects of market volatilities on MicroSectorsTM Oil 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 MicroSectorsTM Oil with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectorsTM Oil and ProShares Ultra.
Diversification Opportunities for MicroSectorsTM Oil and ProShares Ultra
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MicroSectorsTM and ProShares is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectorsTM Oil Gas and ProShares Ultra SP500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra SP500 and MicroSectorsTM Oil 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 MicroSectorsTM Oil Gas 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 SP500 has no effect on the direction of MicroSectorsTM Oil i.e., MicroSectorsTM Oil and ProShares Ultra go up and down completely randomly.
Pair Corralation between MicroSectorsTM Oil and ProShares Ultra
Given the investment horizon of 90 days MicroSectorsTM Oil Gas is expected to generate 2.39 times more return on investment than ProShares Ultra. However, MicroSectorsTM Oil is 2.39 times more volatile than ProShares Ultra SP500. It trades about 0.21 of its potential returns per unit of risk. ProShares Ultra SP500 is currently generating about 0.36 per unit of risk. If you would invest 3,126 in MicroSectorsTM Oil Gas on September 4, 2024 and sell it today you would earn a total of 468.00 from holding MicroSectorsTM Oil Gas or generate 14.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MicroSectorsTM Oil Gas vs. ProShares Ultra SP500
Performance |
| Timeline |
| MicroSectorsTM Oil Gas |
| ProShares Ultra SP500 |
MicroSectorsTM Oil and ProShares Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectorsTM Oil and ProShares Ultra
The main advantage of trading using opposite MicroSectorsTM Oil and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectorsTM Oil 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.| MicroSectorsTM Oil vs. MicroSectorsTM Oil Gas | MicroSectorsTM Oil vs. UBS ETRACS | MicroSectorsTM Oil vs. Direxion Daily SP | MicroSectorsTM Oil vs. Direxion Daily SP |
| ProShares Ultra vs. ProShares Ultra QQQ | ProShares Ultra vs. ProShares Ultra Dow30 | ProShares Ultra vs. ProShares UltraShort SP500 | ProShares Ultra vs. ProShares Ultra Financials |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Transaction History View history of all your transactions and understand their impact on performance |