Correlation Between ProShares Ultra and Main Sector
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Main Sector 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 Main Sector 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 Main Sector Rotation, you can compare the effects of market volatilities on ProShares Ultra and Main Sector 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 Main Sector. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Main Sector.
Diversification Opportunities for ProShares Ultra and Main Sector
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and Main is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Euro and Main Sector Rotation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Main Sector Rotation 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 Main Sector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Main Sector Rotation has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Main Sector go up and down completely randomly.
Pair Corralation between ProShares Ultra and Main Sector
Considering the 90-day investment horizon ProShares Ultra Euro is expected to under-perform the Main Sector. In addition to that, ProShares Ultra is 1.19 times more volatile than Main Sector Rotation. It trades about -0.25 of its total potential returns per unit of risk. Main Sector Rotation is currently generating about 0.17 per unit of volatility. If you would invest 5,390 in Main Sector Rotation on August 25, 2024 and sell it today you would earn a total of 223.00 from holding Main Sector Rotation or generate 4.14% 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. Main Sector Rotation
Performance |
| Timeline |
| ProShares Ultra Euro |
| Main Sector Rotation |
ProShares Ultra and Main Sector Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and Main Sector
The main advantage of trading using opposite ProShares Ultra and Main Sector positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, Main Sector 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 Main Sector will offset losses from the drop in Main Sector's long position.| ProShares Ultra vs. ProShares VIX Short Term | ProShares Ultra vs. ProShares UltraShort Yen | ProShares Ultra vs. iPath Series B |
| Main Sector vs. Main Thematic Innovation | Main Sector vs. SPDR SSGA Sector | Main Sector vs. iShares MSCI USA | Main Sector vs. SPDR MSCI USA |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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