Correlation Between ProShares Ultra and ProShares Hedge
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and ProShares Hedge 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 Hedge 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 Hedge Replication, you can compare the effects of market volatilities on ProShares Ultra and ProShares Hedge 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 Hedge. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and ProShares Hedge.
Diversification Opportunities for ProShares Ultra and ProShares Hedge
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and ProShares is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Consumer and ProShares Hedge Replication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Hedge Repl 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 Hedge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Hedge Repl has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and ProShares Hedge go up and down completely randomly.
Pair Corralation between ProShares Ultra and ProShares Hedge
Considering the 90-day investment horizon ProShares Ultra Consumer is expected to generate 8.86 times more return on investment than ProShares Hedge. However, ProShares Ultra is 8.86 times more volatile than ProShares Hedge Replication. It trades about 0.43 of its potential returns per unit of risk. ProShares Hedge Replication is currently generating about 0.26 per unit of risk. If you would invest 4,180 in ProShares Ultra Consumer on September 2, 2024 and sell it today you would earn a total of 931.00 from holding ProShares Ultra Consumer or generate 22.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra Consumer vs. ProShares Hedge Replication
Performance |
| Timeline |
| ProShares Ultra Consumer |
| ProShares Hedge Repl |
ProShares Ultra and ProShares Hedge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and ProShares Hedge
The main advantage of trading using opposite ProShares Ultra and ProShares Hedge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, ProShares Hedge 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 Hedge will offset losses from the drop in ProShares Hedge'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 Hedge vs. ProShares Merger ETF | ProShares Hedge vs. IQ Hedge Multi Strategy | ProShares Hedge vs. ProShares Large Cap | ProShares Hedge vs. IQ Merger Arbitrage |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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