Correlation Between ProShares Ultra and First Trust
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and First Trust 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 First Trust 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 First Trust Nasdaq, you can compare the effects of market volatilities on ProShares Ultra and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and First Trust.
Diversification Opportunities for ProShares Ultra and First Trust
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and First is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Euro and First Trust Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Nasdaq 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Nasdaq has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and First Trust go up and down completely randomly.
Pair Corralation between ProShares Ultra and First Trust
Considering the 90-day investment horizon ProShares Ultra Euro is expected to under-perform the First Trust. But the etf apears to be less risky and, when comparing its historical volatility, ProShares Ultra Euro is 1.5 times less risky than First Trust. The etf trades about -0.06 of its potential returns per unit of risk. The First Trust Nasdaq is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,075 in First Trust Nasdaq on August 24, 2024 and sell it today you would earn a total of 145.00 from holding First Trust Nasdaq or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra Euro vs. First Trust Nasdaq
Performance |
| Timeline |
| ProShares Ultra Euro |
| First Trust Nasdaq |
ProShares Ultra and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and First Trust
The main advantage of trading using opposite ProShares Ultra and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| ProShares Ultra vs. Invesco DB Dollar | ProShares Ultra vs. iPath Series B | ProShares Ultra vs. ProShares VIX Short Term | ProShares Ultra vs. ProShares VIX Mid Term |
| First Trust vs. First Trust Nasdaq | First Trust vs. First Trust Nasdaq | First Trust vs. First Trust Nasdaq | First Trust vs. First Trust Nasdaq |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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