Correlation Between ProShares Ultra and VanEck ETF
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and VanEck ETF 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 Ultra and VanEck ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Ultra Semiconductors and VanEck ETF Trust, you can compare the effects of market volatilities on ProShares Ultra and VanEck ETF 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 Ultra with a short position of VanEck ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and VanEck ETF.
Diversification Opportunities for ProShares Ultra and VanEck ETF
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ProShares and VanEck is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Semiconductors and VanEck ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck ETF Trust and ProShares Ultra 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 Ultra Semiconductors are associated (or correlated) with VanEck ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck ETF Trust has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and VanEck ETF go up and down completely randomly.
Pair Corralation between ProShares Ultra and VanEck ETF
Considering the 90-day investment horizon ProShares Ultra Semiconductors is expected to under-perform the VanEck ETF. In addition to that, ProShares Ultra is 4.36 times more volatile than VanEck ETF Trust. It trades about -0.14 of its total potential returns per unit of risk. VanEck ETF Trust is currently generating about 0.34 per unit of volatility. If you would invest 4,350 in VanEck ETF Trust on September 13, 2024 and sell it today you would earn a total of 260.00 from holding VanEck ETF Trust or generate 5.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
ProShares Ultra Semiconductors vs. VanEck ETF Trust
Performance |
| Timeline |
| ProShares Ultra Semi |
| VanEck ETF Trust |
ProShares Ultra and VanEck ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and VanEck ETF
The main advantage of trading using opposite ProShares Ultra and VanEck ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, VanEck ETF 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 VanEck ETF will offset losses from the drop in VanEck ETF's long position.| ProShares Ultra vs. ProShares Ultra SP500 | ProShares Ultra vs. Direxion Daily SP500 | ProShares Ultra vs. Direxion Daily SP | ProShares Ultra vs. Direxion Daily SP |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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