Correlation Between ProShares Ultra and VanEck Emerging
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and VanEck Emerging 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 VanEck Emerging 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 VanEck Emerging Markets, you can compare the effects of market volatilities on ProShares Ultra and VanEck Emerging 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 VanEck Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and VanEck Emerging.
Diversification Opportunities for ProShares Ultra and VanEck Emerging
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and VanEck is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Euro and VanEck Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Emerging Markets 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 VanEck Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Emerging Markets has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and VanEck Emerging go up and down completely randomly.
Pair Corralation between ProShares Ultra and VanEck Emerging
Considering the 90-day investment horizon ProShares Ultra Euro is expected to under-perform the VanEck Emerging. In addition to that, ProShares Ultra is 3.06 times more volatile than VanEck Emerging Markets. It trades about -0.24 of its total potential returns per unit of risk. VanEck Emerging Markets is currently generating about 0.06 per unit of volatility. If you would invest 1,953 in VanEck Emerging Markets on August 29, 2024 and sell it today you would earn a total of 11.00 from holding VanEck Emerging Markets or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra Euro vs. VanEck Emerging Markets
Performance |
| Timeline |
| ProShares Ultra Euro |
| VanEck Emerging Markets |
ProShares Ultra and VanEck Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and VanEck Emerging
The main advantage of trading using opposite ProShares Ultra and VanEck Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, VanEck Emerging 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 VanEck Emerging will offset losses from the drop in VanEck Emerging's long position.The idea behind ProShares Ultra Euro and VanEck Emerging Markets 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.| VanEck Emerging vs. BondBloxx ETF Trust | VanEck Emerging vs. Virtus ETF Trust | VanEck Emerging vs. Ocean Park High | VanEck Emerging vs. Virtus ETF Trust |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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