Correlation Between ProShares UltraPro and American Century
Can any of the company-specific risk be diversified away by investing in both ProShares UltraPro and American Century 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 American Century 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 American Century Quality, you can compare the effects of market volatilities on ProShares UltraPro and American Century 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 American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraPro and American Century.
Diversification Opportunities for ProShares UltraPro and American Century
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ProShares and American is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraPro SP500 and American Century Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Quality 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 American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century Quality has no effect on the direction of ProShares UltraPro i.e., ProShares UltraPro and American Century go up and down completely randomly.
Pair Corralation between ProShares UltraPro and American Century
Given the investment horizon of 90 days ProShares UltraPro is expected to generate 1.26 times less return on investment than American Century. In addition to that, ProShares UltraPro is 2.15 times more volatile than American Century Quality. It trades about 0.14 of its total potential returns per unit of risk. American Century Quality is currently generating about 0.37 per unit of volatility. If you would invest 9,321 in American Century Quality on August 30, 2024 and sell it today you would earn a total of 964.00 from holding American Century Quality or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraPro SP500 vs. American Century Quality
Performance |
| Timeline |
| ProShares UltraPro SP500 |
| American Century Quality |
ProShares UltraPro and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraPro and American Century
The main advantage of trading using opposite ProShares UltraPro and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraPro position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century'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 |
| American Century vs. American Century STOXX | American Century vs. American Century Quality | American Century vs. Nuveen ESG Large Cap | American Century vs. Invesco SP 500 |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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