Correlation Between ProShares Ultra and Dimensional Sustainability

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

Diversification Opportunities for ProShares Ultra and Dimensional Sustainability

-0.82
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between ProShares and Dimensional is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Euro and Dimensional Sustainability Cor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Sustainability 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 Dimensional Sustainability. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional Sustainability has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Dimensional Sustainability go up and down completely randomly.

Pair Corralation between ProShares Ultra and Dimensional Sustainability

Considering the 90-day investment horizon ProShares Ultra Euro is expected to under-perform the Dimensional Sustainability. In addition to that, ProShares Ultra is 1.0 times more volatile than Dimensional Sustainability Core. It trades about 0.0 of its total potential returns per unit of risk. Dimensional Sustainability Core is currently generating about 0.1 per unit of volatility. If you would invest  2,550  in Dimensional Sustainability Core on August 26, 2024 and sell it today you would earn a total of  1,357  from holding Dimensional Sustainability Core or generate 53.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

ProShares Ultra Euro  vs.  Dimensional Sustainability Cor

 Performance 
       Timeline  
ProShares Ultra Euro 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ProShares Ultra Euro has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's essential indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.
Dimensional Sustainability 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional Sustainability Core are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Dimensional Sustainability may actually be approaching a critical reversion point that can send shares even higher in December 2024.

ProShares Ultra and Dimensional Sustainability Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ProShares Ultra and Dimensional Sustainability

The main advantage of trading using opposite ProShares Ultra and Dimensional Sustainability positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, Dimensional Sustainability 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 Dimensional Sustainability will offset losses from the drop in Dimensional Sustainability's long position.
The idea behind ProShares Ultra Euro and Dimensional Sustainability Core 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.
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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