Correlation Between ProShares UltraPro and Dimensional Targeted
Can any of the company-specific risk be diversified away by investing in both ProShares UltraPro and Dimensional Targeted 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 Dimensional Targeted 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 Dimensional Targeted Value, you can compare the effects of market volatilities on ProShares UltraPro and Dimensional Targeted 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 Dimensional Targeted. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraPro and Dimensional Targeted.
Diversification Opportunities for ProShares UltraPro and Dimensional Targeted
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and Dimensional is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraPro SP500 and Dimensional Targeted Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Targeted 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 Dimensional Targeted. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional Targeted has no effect on the direction of ProShares UltraPro i.e., ProShares UltraPro and Dimensional Targeted go up and down completely randomly.
Pair Corralation between ProShares UltraPro and Dimensional Targeted
Given the investment horizon of 90 days ProShares UltraPro is expected to generate 1.23 times less return on investment than Dimensional Targeted. In addition to that, ProShares UltraPro is 1.5 times more volatile than Dimensional Targeted Value. It trades about 0.14 of its total potential returns per unit of risk. Dimensional Targeted Value is currently generating about 0.26 per unit of volatility. If you would invest 5,563 in Dimensional Targeted Value on August 28, 2024 and sell it today you would earn a total of 541.00 from holding Dimensional Targeted Value or generate 9.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraPro SP500 vs. Dimensional Targeted Value
Performance |
| Timeline |
| ProShares UltraPro SP500 |
| Dimensional Targeted |
ProShares UltraPro and Dimensional Targeted Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraPro and Dimensional Targeted
The main advantage of trading using opposite ProShares UltraPro and Dimensional Targeted positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraPro position performs unexpectedly, Dimensional Targeted 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 Dimensional Targeted will offset losses from the drop in Dimensional Targeted'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 |
| Dimensional Targeted vs. Dimensional Small Cap | Dimensional Targeted vs. Dimensional Core Equity | Dimensional Targeted vs. Dimensional International Value | Dimensional Targeted vs. Dimensional Equity ETF |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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