Correlation Between ProShares Ultra and VictoryShares 500
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and VictoryShares 500 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 VictoryShares 500 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Ultra Euro and VictoryShares 500 Enhanced, you can compare the effects of market volatilities on ProShares Ultra and VictoryShares 500 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 VictoryShares 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and VictoryShares 500.
Diversification Opportunities for ProShares Ultra and VictoryShares 500
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and VictoryShares is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Euro and VictoryShares 500 Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares 500 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 Euro are associated (or correlated) with VictoryShares 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares 500 has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and VictoryShares 500 go up and down completely randomly.
Pair Corralation between ProShares Ultra and VictoryShares 500
Considering the 90-day investment horizon ProShares Ultra Euro is expected to under-perform the VictoryShares 500. In addition to that, ProShares Ultra is 1.63 times more volatile than VictoryShares 500 Enhanced. It trades about -0.24 of its total potential returns per unit of risk. VictoryShares 500 Enhanced is currently generating about 0.3 per unit of volatility. If you would invest 6,989 in VictoryShares 500 Enhanced on August 29, 2024 and sell it today you would earn a total of 389.00 from holding VictoryShares 500 Enhanced or generate 5.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra Euro vs. VictoryShares 500 Enhanced
Performance |
| Timeline |
| ProShares Ultra Euro |
| VictoryShares 500 |
ProShares Ultra and VictoryShares 500 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and VictoryShares 500
The main advantage of trading using opposite ProShares Ultra and VictoryShares 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, VictoryShares 500 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 VictoryShares 500 will offset losses from the drop in VictoryShares 500's long position.The idea behind ProShares Ultra Euro and VictoryShares 500 Enhanced 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.| VictoryShares 500 vs. Morningstar Unconstrained Allocation | VictoryShares 500 vs. High Yield Municipal Fund | VictoryShares 500 vs. Via Renewables | VictoryShares 500 vs. Knife River |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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