Correlation Between ProShares Ultra and Overlay Shares
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Overlay Shares 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 Overlay Shares 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 Overlay Shares Large, you can compare the effects of market volatilities on ProShares Ultra and Overlay Shares 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 Overlay Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Overlay Shares.
Diversification Opportunities for ProShares Ultra and Overlay Shares
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and Overlay is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Euro and Overlay Shares Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Overlay Shares Large 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 Overlay Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Overlay Shares Large has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Overlay Shares go up and down completely randomly.
Pair Corralation between ProShares Ultra and Overlay Shares
Considering the 90-day investment horizon ProShares Ultra Euro is expected to under-perform the Overlay Shares. In addition to that, ProShares Ultra is 1.4 times more volatile than Overlay Shares Large. It trades about -0.19 of its total potential returns per unit of risk. Overlay Shares Large is currently generating about 0.16 per unit of volatility. If you would invest 4,646 in Overlay Shares Large on August 31, 2024 and sell it today you would earn a total of 170.70 from holding Overlay Shares Large or generate 3.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
ProShares Ultra Euro vs. Overlay Shares Large
Performance |
| Timeline |
| ProShares Ultra Euro |
| Overlay Shares Large |
ProShares Ultra and Overlay Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and Overlay Shares
The main advantage of trading using opposite ProShares Ultra and Overlay Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, Overlay Shares 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 Overlay Shares will offset losses from the drop in Overlay Shares' long position.| ProShares Ultra vs. ProShares Ultra Yen | ProShares Ultra vs. ProShares UltraShort Yen | ProShares Ultra vs. ProShares UltraShort Euro | ProShares Ultra vs. ProShares Ultra Consumer |
| Overlay Shares vs. Vanguard Total Stock | Overlay Shares vs. SPDR SP 500 | Overlay Shares vs. iShares Core SP | Overlay Shares vs. Vanguard Dividend Appreciation |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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