Correlation Between ProShares Ultra and WisdomTree International
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and WisdomTree International 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 WisdomTree International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Ultra Technology and WisdomTree International MidCap, you can compare the effects of market volatilities on ProShares Ultra and WisdomTree International 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 WisdomTree International. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and WisdomTree International.
Diversification Opportunities for ProShares Ultra and WisdomTree International
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ProShares and WisdomTree is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Technology and WisdomTree International MidCa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree International 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 Technology are associated (or correlated) with WisdomTree International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree International has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and WisdomTree International go up and down completely randomly.
Pair Corralation between ProShares Ultra and WisdomTree International
Considering the 90-day investment horizon ProShares Ultra Technology is expected to generate 3.37 times more return on investment than WisdomTree International. However, ProShares Ultra is 3.37 times more volatile than WisdomTree International MidCap. It trades about 0.04 of its potential returns per unit of risk. WisdomTree International MidCap is currently generating about -0.13 per unit of risk. If you would invest 6,945 in ProShares Ultra Technology on August 28, 2024 and sell it today you would earn a total of 124.00 from holding ProShares Ultra Technology or generate 1.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra Technology vs. WisdomTree International MidCa
Performance |
| Timeline |
| ProShares Ultra Tech |
| WisdomTree International |
ProShares Ultra and WisdomTree International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and WisdomTree International
The main advantage of trading using opposite ProShares Ultra and WisdomTree International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, WisdomTree International 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 WisdomTree International will offset losses from the drop in WisdomTree International's long position.| ProShares Ultra vs. Direxion Daily SP | ProShares Ultra vs. Direxion Daily Semiconductor | ProShares Ultra vs. Direxion Daily Semiconductor |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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