Correlation Between ProShares Ultra and MicroSectors Travel
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and MicroSectors Travel 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 ProShares Ultra and MicroSectors Travel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Ultra QQQ and MicroSectors Travel 3X, you can compare the effects of market volatilities on ProShares Ultra and MicroSectors Travel 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 ProShares Ultra with a short position of MicroSectors Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and MicroSectors Travel.
Diversification Opportunities for ProShares Ultra and MicroSectors Travel
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ProShares and MicroSectors is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra QQQ and MicroSectors Travel 3X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectors Travel and ProShares Ultra 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 ProShares Ultra QQQ are associated (or correlated) with MicroSectors Travel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroSectors Travel has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and MicroSectors Travel go up and down completely randomly.
Pair Corralation between ProShares Ultra and MicroSectors Travel
Considering the 90-day investment horizon ProShares Ultra is expected to generate 1.16 times less return on investment than MicroSectors Travel. But when comparing it to its historical volatility, ProShares Ultra QQQ is 1.4 times less risky than MicroSectors Travel. It trades about 0.12 of its potential returns per unit of risk. MicroSectors Travel 3X is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 6,044 in MicroSectors Travel 3X on September 13, 2024 and sell it today you would earn a total of 310.00 from holding MicroSectors Travel 3X or generate 5.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra QQQ vs. MicroSectors Travel 3X
Performance |
| Timeline |
| ProShares Ultra QQQ |
| MicroSectors Travel |
ProShares Ultra and MicroSectors Travel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and MicroSectors Travel
The main advantage of trading using opposite ProShares Ultra and MicroSectors Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, MicroSectors Travel 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 MicroSectors Travel will offset losses from the drop in MicroSectors Travel's long position.| ProShares Ultra vs. ProShares Ultra SP500 | ProShares Ultra vs. ProShares UltraShort QQQ | ProShares Ultra vs. ProShares Ultra Dow30 | ProShares Ultra vs. ProShares Ultra Russell2000 |
| MicroSectors Travel vs. MicroSectors Travel 3X | MicroSectors Travel vs. MicroSectors Gold Miners | MicroSectors Travel vs. Direxion Daily Travel | MicroSectors Travel vs. MicroSectors Solactive FANG |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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