Correlation Between ProShares UltraPro and Motley Fool
Can any of the company-specific risk be diversified away by investing in both ProShares UltraPro and Motley Fool 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 Motley Fool 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 Motley Fool 100, you can compare the effects of market volatilities on ProShares UltraPro and Motley Fool 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 Motley Fool. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraPro and Motley Fool.
Diversification Opportunities for ProShares UltraPro and Motley Fool
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ProShares and Motley is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraPro SP500 and Motley Fool 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Motley Fool 100 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 Motley Fool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Motley Fool 100 has no effect on the direction of ProShares UltraPro i.e., ProShares UltraPro and Motley Fool go up and down completely randomly.
Pair Corralation between ProShares UltraPro and Motley Fool
Given the investment horizon of 90 days ProShares UltraPro SP500 is expected to generate 2.42 times more return on investment than Motley Fool. However, ProShares UltraPro is 2.42 times more volatile than Motley Fool 100. It trades about 0.12 of its potential returns per unit of risk. Motley Fool 100 is currently generating about 0.15 per unit of risk. If you would invest 8,619 in ProShares UltraPro SP500 on August 30, 2024 and sell it today you would earn a total of 920.00 from holding ProShares UltraPro SP500 or generate 10.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.73% |
| Values | Daily Returns |
ProShares UltraPro SP500 vs. Motley Fool 100
Performance |
| Timeline |
| ProShares UltraPro SP500 |
| Motley Fool 100 |
ProShares UltraPro and Motley Fool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraPro and Motley Fool
The main advantage of trading using opposite ProShares UltraPro and Motley Fool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraPro position performs unexpectedly, Motley Fool 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 Motley Fool will offset losses from the drop in Motley Fool'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 |
| Motley Fool vs. Motley Fool Next | Motley Fool vs. Motley Fool Capital | Motley Fool vs. The RBB Fund | Motley Fool vs. Motley Fool Global |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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