Correlation Between ProShares UltraPro and Bank of Montreal
Can any of the company-specific risk be diversified away by investing in both ProShares UltraPro and Bank of Montreal 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 UltraPro and Bank of Montreal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraPro SP500 and Bank of Montreal, you can compare the effects of market volatilities on ProShares UltraPro and Bank of Montreal 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 UltraPro with a short position of Bank of Montreal. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraPro and Bank of Montreal.
Diversification Opportunities for ProShares UltraPro and Bank of Montreal
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and Bank is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraPro SP500 and Bank of Montreal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Montreal and ProShares UltraPro 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 UltraPro SP500 are associated (or correlated) with Bank of Montreal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Montreal has no effect on the direction of ProShares UltraPro i.e., ProShares UltraPro and Bank of Montreal go up and down completely randomly.
Pair Corralation between ProShares UltraPro and Bank of Montreal
Given the investment horizon of 90 days ProShares UltraPro SP500 is expected to generate 0.47 times more return on investment than Bank of Montreal. However, ProShares UltraPro SP500 is 2.15 times less risky than Bank of Montreal. It trades about 0.15 of its potential returns per unit of risk. Bank of Montreal is currently generating about 0.07 per unit of risk. If you would invest 4,231 in ProShares UltraPro SP500 on September 1, 2024 and sell it today you would earn a total of 5,474 from holding ProShares UltraPro SP500 or generate 129.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
ProShares UltraPro SP500 vs. Bank of Montreal
Performance |
| Timeline |
| ProShares UltraPro SP500 |
| Bank of Montreal |
ProShares UltraPro and Bank of Montreal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraPro and Bank of Montreal
The main advantage of trading using opposite ProShares UltraPro and Bank of Montreal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraPro position performs unexpectedly, Bank of Montreal 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 Bank of Montreal will offset losses from the drop in Bank of Montreal's long position.| ProShares UltraPro vs. ProShares UltraPro Dow30 | ProShares UltraPro vs. ProShares UltraPro Short | ProShares UltraPro vs. ProShares UltraPro QQQ | ProShares UltraPro vs. Direxion Daily Small |
| Bank of Montreal vs. First Trust Exchange Traded | Bank of Montreal vs. Ultimus Managers Trust | Bank of Montreal vs. Horizon Kinetics Medical | Bank of Montreal vs. Harbor Health Care |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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