Correlation Between SPDR SSgA and ProShares Ultra
Can any of the company-specific risk be diversified away by investing in both SPDR SSgA 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 SPDR SSgA and ProShares Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SSgA Multi Asset and ProShares Ultra High, you can compare the effects of market volatilities on SPDR SSgA 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 SPDR SSgA with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SSgA and ProShares Ultra.
Diversification Opportunities for SPDR SSgA and ProShares Ultra
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and ProShares is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SSgA Multi Asset and ProShares Ultra High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra High and SPDR SSgA 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 SPDR SSgA Multi Asset 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 High has no effect on the direction of SPDR SSgA i.e., SPDR SSgA and ProShares Ultra go up and down completely randomly.
Pair Corralation between SPDR SSgA and ProShares Ultra
Considering the 90-day investment horizon SPDR SSgA Multi Asset is expected to under-perform the ProShares Ultra. In addition to that, SPDR SSgA is 1.39 times more volatile than ProShares Ultra High. It trades about -0.09 of its total potential returns per unit of risk. ProShares Ultra High is currently generating about 0.11 per unit of volatility. If you would invest 7,422 in ProShares Ultra High on December 6, 2024 and sell it today you would earn a total of 64.00 from holding ProShares Ultra High or generate 0.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SSgA Multi Asset vs. ProShares Ultra High
Performance |
| Timeline |
| SPDR SSgA Multi |
| ProShares Ultra High |
SPDR SSgA and ProShares Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SSgA and ProShares Ultra
The main advantage of trading using opposite SPDR SSgA and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SSgA 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.| SPDR SSgA vs. SPDR SSgA Global | ||
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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