Correlation Between ProShares Ultra and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Federated Hermes 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 Federated Hermes 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 Federated Hermes ETF, you can compare the effects of market volatilities on ProShares Ultra and Federated Hermes 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 Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Federated Hermes.
Diversification Opportunities for ProShares Ultra and Federated Hermes
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and Federated is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Technology and Federated Hermes ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes ETF 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 Federated Hermes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Hermes ETF has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Federated Hermes go up and down completely randomly.
Pair Corralation between ProShares Ultra and Federated Hermes
Considering the 90-day investment horizon ProShares Ultra Technology is expected to generate 22.73 times more return on investment than Federated Hermes. However, ProShares Ultra is 22.73 times more volatile than Federated Hermes ETF. It trades about 0.04 of its potential returns per unit of risk. Federated Hermes ETF is currently generating about 0.23 per unit of risk. If you would invest 6,381 in ProShares Ultra Technology on September 3, 2024 and sell it today you would earn a total of 696.00 from holding ProShares Ultra Technology or generate 10.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra Technology vs. Federated Hermes ETF
Performance |
| Timeline |
| ProShares Ultra Tech |
| Federated Hermes ETF |
ProShares Ultra and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and Federated Hermes
The main advantage of trading using opposite ProShares Ultra and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, Federated Hermes 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 Federated Hermes will offset losses from the drop in Federated Hermes' long position.| ProShares Ultra vs. ProShares Ultra SP500 | ProShares Ultra vs. Direxion Daily SP500 | ProShares Ultra vs. ProShares Ultra QQQ | ProShares Ultra vs. Direxion Daily SP |
| Federated Hermes vs. iShares iBoxx Investment | Federated Hermes vs. SPDR Bloomberg High | Federated Hermes vs. iShares TIPS Bond | Federated Hermes vs. iShares 20 Year |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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