Correlation Between ProShares UltraPro and CHIM
Can any of the company-specific risk be diversified away by investing in both ProShares UltraPro and CHIM 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 CHIM 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 CHIM, you can compare the effects of market volatilities on ProShares UltraPro and CHIM 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 CHIM. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraPro and CHIM.
Diversification Opportunities for ProShares UltraPro and CHIM
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and CHIM is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraPro SP500 and CHIM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHIM 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 CHIM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHIM has no effect on the direction of ProShares UltraPro i.e., ProShares UltraPro and CHIM go up and down completely randomly.
Pair Corralation between ProShares UltraPro and CHIM
Given the investment horizon of 90 days ProShares UltraPro SP500 is expected to generate 1.72 times more return on investment than CHIM. However, ProShares UltraPro is 1.72 times more volatile than CHIM. It trades about 0.1 of its potential returns per unit of risk. CHIM is currently generating about 0.04 per unit of risk. If you would invest 4,208 in ProShares UltraPro SP500 on October 24, 2024 and sell it today you would earn a total of 5,510 from holding ProShares UltraPro SP500 or generate 130.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 8.76% |
| Values | Daily Returns |
ProShares UltraPro SP500 vs. CHIM
Performance |
| Timeline |
| ProShares UltraPro SP500 |
| CHIM |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
ProShares UltraPro and CHIM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraPro and CHIM
The main advantage of trading using opposite ProShares UltraPro and CHIM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraPro position performs unexpectedly, CHIM 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 CHIM will offset losses from the drop in CHIM'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 |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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