Correlation Between ProShares Ultra and FlexShares Morningstar
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and FlexShares Morningstar 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 FlexShares Morningstar 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 FlexShares Morningstar Market, you can compare the effects of market volatilities on ProShares Ultra and FlexShares Morningstar 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 FlexShares Morningstar. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and FlexShares Morningstar.
Diversification Opportunities for ProShares Ultra and FlexShares Morningstar
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ProShares and FlexShares is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Euro and FlexShares Morningstar Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares Morningstar 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 FlexShares Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares Morningstar has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and FlexShares Morningstar go up and down completely randomly.
Pair Corralation between ProShares Ultra and FlexShares Morningstar
Considering the 90-day investment horizon ProShares Ultra Euro is expected to generate 1.46 times more return on investment than FlexShares Morningstar. However, ProShares Ultra is 1.46 times more volatile than FlexShares Morningstar Market. It trades about 0.0 of its potential returns per unit of risk. FlexShares Morningstar Market is currently generating about -0.09 per unit of risk. If you would invest 1,073 in ProShares Ultra Euro on November 28, 2024 and sell it today you would earn a total of 0.00 from holding ProShares Ultra Euro or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra Euro vs. FlexShares Morningstar Market
Performance |
| Timeline |
| ProShares Ultra Euro |
| FlexShares Morningstar |
ProShares Ultra and FlexShares Morningstar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and FlexShares Morningstar
The main advantage of trading using opposite ProShares Ultra and FlexShares Morningstar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, FlexShares Morningstar 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 FlexShares Morningstar will offset losses from the drop in FlexShares Morningstar's 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 |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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