Correlation Between ProShares UltraPro and MicroSectors FANG
Can any of the company-specific risk be diversified away by investing in both ProShares UltraPro and MicroSectors FANG 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 UltraPro and MicroSectors FANG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraPro Short and MicroSectors FANG Index, you can compare the effects of market volatilities on ProShares UltraPro and MicroSectors FANG 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 UltraPro with a short position of MicroSectors FANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraPro and MicroSectors FANG.
Diversification Opportunities for ProShares UltraPro and MicroSectors FANG
-0.94 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and MicroSectors is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraPro Short and MicroSectors FANG Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectors FANG Index and ProShares UltraPro 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 UltraPro Short are associated (or correlated) with MicroSectors FANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroSectors FANG Index has no effect on the direction of ProShares UltraPro i.e., ProShares UltraPro and MicroSectors FANG go up and down completely randomly.
Pair Corralation between ProShares UltraPro and MicroSectors FANG
Given the investment horizon of 90 days ProShares UltraPro Short is expected to under-perform the MicroSectors FANG. But the etf apears to be less risky and, when comparing its historical volatility, ProShares UltraPro Short is 1.4 times less risky than MicroSectors FANG. The etf trades about -0.09 of its potential returns per unit of risk. The MicroSectors FANG Index is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 8,240 in MicroSectors FANG Index on November 2, 2024 and sell it today you would earn a total of 53,760 from holding MicroSectors FANG Index or generate 652.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraPro Short vs. MicroSectors FANG Index
Performance |
| Timeline |
| ProShares UltraPro Short |
| MicroSectors FANG Index |
ProShares UltraPro and MicroSectors FANG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraPro and MicroSectors FANG
The main advantage of trading using opposite ProShares UltraPro and MicroSectors FANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraPro position performs unexpectedly, MicroSectors FANG 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 FANG will offset losses from the drop in MicroSectors FANG's long position.| ProShares UltraPro vs. ProShares UltraPro QQQ | ProShares UltraPro vs. ProShares UltraPro Short | ProShares UltraPro vs. ProShares UltraPro Short | ProShares UltraPro vs. ProShares Ultra VIX |
| MicroSectors FANG vs. Direxion Daily Semiconductor | MicroSectors FANG vs. MicroSectors Solactive FANG | MicroSectors FANG vs. MicroSectors FANG Index | MicroSectors FANG vs. Direxion Daily Technology |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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