Correlation Between ProShares Ultra and ProShares Trust
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and ProShares Trust 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 ProShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Ultra Consumer and ProShares Trust , you can compare the effects of market volatilities on ProShares Ultra and ProShares Trust 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 ProShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and ProShares Trust.
Diversification Opportunities for ProShares Ultra and ProShares Trust
-0.92 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and ProShares is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Consumer and ProShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Trust 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 Consumer are associated (or correlated) with ProShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Trust has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and ProShares Trust go up and down completely randomly.
Pair Corralation between ProShares Ultra and ProShares Trust
Considering the 90-day investment horizon ProShares Ultra Consumer is expected to generate 0.5 times more return on investment than ProShares Trust. However, ProShares Ultra Consumer is 2.01 times less risky than ProShares Trust. It trades about 0.65 of its potential returns per unit of risk. ProShares Trust is currently generating about -0.23 per unit of risk. If you would invest 4,815 in ProShares Ultra Consumer on September 18, 2024 and sell it today you would earn a total of 1,105 from holding ProShares Ultra Consumer or generate 22.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra Consumer vs. ProShares Trust
Performance |
| Timeline |
| ProShares Ultra Consumer |
| ProShares Trust |
ProShares Ultra and ProShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and ProShares Trust
The main advantage of trading using opposite ProShares Ultra and ProShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, ProShares Trust 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 Trust will offset losses from the drop in ProShares Trust's long position.| ProShares Ultra vs. ProShares Ultra Consumer | ProShares Ultra vs. ProShares Ultra Industrials | ProShares Ultra vs. ProShares Ultra Utilities | ProShares Ultra vs. ProShares Ultra Health |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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