Correlation Between ProShares Ultra and SPKY

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Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and SPKY 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 SPKY 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 SPKY, you can compare the effects of market volatilities on ProShares Ultra and SPKY 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 SPKY. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and SPKY.

Diversification Opportunities for ProShares Ultra and SPKY

0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between ProShares and SPKY is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Consumer and SPKY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPKY 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 SPKY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPKY has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and SPKY go up and down completely randomly.

Pair Corralation between ProShares Ultra and SPKY

If you would invest  1,909  in ProShares Ultra Consumer on September 14, 2024 and sell it today you would earn a total of  62.00  from holding ProShares Ultra Consumer or generate 3.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy4.76%
ValuesDaily Returns

ProShares Ultra Consumer  vs.  SPKY

 Performance 
       Timeline  
ProShares Ultra Consumer 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ProShares Ultra Consumer has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, ProShares Ultra is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
SPKY 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SPKY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, SPKY is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

ProShares Ultra and SPKY Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ProShares Ultra and SPKY

The main advantage of trading using opposite ProShares Ultra and SPKY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, SPKY 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 SPKY will offset losses from the drop in SPKY's long position.
The idea behind ProShares Ultra Consumer and SPKY pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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