Correlation Between ProShares Ultra and ProShares Large
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and ProShares Large 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 Large 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 Large Cap, you can compare the effects of market volatilities on ProShares Ultra and ProShares Large 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 Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and ProShares Large.
Diversification Opportunities for ProShares Ultra and ProShares Large
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ProShares and ProShares is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Consumer and ProShares Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Large Cap 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 Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Large Cap has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and ProShares Large go up and down completely randomly.
Pair Corralation between ProShares Ultra and ProShares Large
Considering the 90-day investment horizon ProShares Ultra Consumer is expected to generate 2.84 times more return on investment than ProShares Large. However, ProShares Ultra is 2.84 times more volatile than ProShares Large Cap. It trades about 0.47 of its potential returns per unit of risk. ProShares Large Cap is currently generating about 0.34 per unit of risk. If you would invest 4,144 in ProShares Ultra Consumer on September 3, 2024 and sell it today you would earn a total of 967.00 from holding ProShares Ultra Consumer or generate 23.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra Consumer vs. ProShares Large Cap
Performance |
| Timeline |
| ProShares Ultra Consumer |
| ProShares Large Cap |
ProShares Ultra and ProShares Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and ProShares Large
The main advantage of trading using opposite ProShares Ultra and ProShares Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, ProShares Large 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 Large will offset losses from the drop in ProShares Large'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 |
| ProShares Large vs. ProShares Hedge Replication | ProShares Large vs. ProShares Ultra MSCI | ProShares Large vs. ProShares Ultra Consumer | ProShares Large vs. ProShares Ultra Consumer |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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