Correlation Between ProShares Ultra and Arrow DWA
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Arrow DWA 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 Arrow DWA 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 Arrow DWA Tactical, you can compare the effects of market volatilities on ProShares Ultra and Arrow DWA 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 Arrow DWA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Arrow DWA.
Diversification Opportunities for ProShares Ultra and Arrow DWA
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ProShares and Arrow is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Semiconductors and Arrow DWA Tactical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow DWA Tactical 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 Arrow DWA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow DWA Tactical has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Arrow DWA go up and down completely randomly.
Pair Corralation between ProShares Ultra and Arrow DWA
Considering the 90-day investment horizon ProShares Ultra Semiconductors is expected to generate 4.19 times more return on investment than Arrow DWA. However, ProShares Ultra is 4.19 times more volatile than Arrow DWA Tactical. It trades about -0.03 of its potential returns per unit of risk. Arrow DWA Tactical is currently generating about -0.24 per unit of risk. If you would invest 6,808 in ProShares Ultra Semiconductors on August 25, 2024 and sell it today you would lose (278.00) from holding ProShares Ultra Semiconductors or give up 4.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra Semiconductors vs. Arrow DWA Tactical
Performance |
| Timeline |
| ProShares Ultra Semi |
| Arrow DWA Tactical |
ProShares Ultra and Arrow DWA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and Arrow DWA
The main advantage of trading using opposite ProShares Ultra and Arrow DWA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, Arrow DWA 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 Arrow DWA will offset losses from the drop in Arrow DWA's long position.| ProShares Ultra vs. ProShares Ultra Technology | ProShares Ultra vs. ProShares Ultra Industrials | ProShares Ultra vs. ProShares Ultra Basic | ProShares Ultra vs. ProShares Ultra Health |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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