Correlation Between ProShares UltraPro and Strategy Shares
Can any of the company-specific risk be diversified away by investing in both ProShares UltraPro and Strategy Shares 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 Strategy Shares 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 Strategy Shares NewfoundReSolve, you can compare the effects of market volatilities on ProShares UltraPro and Strategy Shares 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 Strategy Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraPro and Strategy Shares.
Diversification Opportunities for ProShares UltraPro and Strategy Shares
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ProShares and Strategy is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraPro SP500 and Strategy Shares NewfoundReSolv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategy Shares Newf 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 Strategy Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategy Shares Newf has no effect on the direction of ProShares UltraPro i.e., ProShares UltraPro and Strategy Shares go up and down completely randomly.
Pair Corralation between ProShares UltraPro and Strategy Shares
Given the investment horizon of 90 days ProShares UltraPro SP500 is expected to generate 3.29 times more return on investment than Strategy Shares. However, ProShares UltraPro is 3.29 times more volatile than Strategy Shares NewfoundReSolve. It trades about 0.09 of its potential returns per unit of risk. Strategy Shares NewfoundReSolve is currently generating about 0.08 per unit of risk. If you would invest 3,950 in ProShares UltraPro SP500 on November 2, 2024 and sell it today you would earn a total of 5,670 from holding ProShares UltraPro SP500 or generate 143.54% 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. Strategy Shares NewfoundReSolv
Performance |
| Timeline |
| ProShares UltraPro SP500 |
| Strategy Shares Newf |
ProShares UltraPro and Strategy Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraPro and Strategy Shares
The main advantage of trading using opposite ProShares UltraPro and Strategy Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraPro position performs unexpectedly, Strategy Shares 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 Strategy Shares will offset losses from the drop in Strategy Shares' 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 |
| Strategy Shares vs. Cambria Trinity ETF | Strategy Shares vs. Northern Lights | Strategy Shares vs. Cambria Global Momentum | Strategy Shares vs. Alpha Architect Value |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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