Correlation Between ProShares Ultra and REX FANG
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and REX FANG 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 REX FANG 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 REX FANG Innovation, you can compare the effects of market volatilities on ProShares Ultra and REX FANG 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 REX FANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and REX FANG.
Diversification Opportunities for ProShares Ultra and REX FANG
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and REX is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Semiconductors and REX FANG Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REX FANG Innovation 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 REX FANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REX FANG Innovation has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and REX FANG go up and down completely randomly.
Pair Corralation between ProShares Ultra and REX FANG
Considering the 90-day investment horizon ProShares Ultra Semiconductors is expected to under-perform the REX FANG. In addition to that, ProShares Ultra is 4.14 times more volatile than REX FANG Innovation. It trades about -0.15 of its total potential returns per unit of risk. REX FANG Innovation is currently generating about 0.03 per unit of volatility. If you would invest 5,059 in REX FANG Innovation on August 30, 2024 and sell it today you would earn a total of 26.00 from holding REX FANG Innovation or generate 0.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra Semiconductors vs. REX FANG Innovation
Performance |
| Timeline |
| ProShares Ultra Semi |
| REX FANG Innovation |
ProShares Ultra and REX FANG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and REX FANG
The main advantage of trading using opposite ProShares Ultra and REX FANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, REX FANG 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 REX FANG will offset losses from the drop in REX FANG's long position.| ProShares Ultra vs. ABIVAX Socit Anonyme | ProShares Ultra vs. Morningstar Unconstrained Allocation | ProShares Ultra vs. SPACE | ProShares Ultra vs. Knife River |
| REX FANG vs. Freedom Day Dividend | REX FANG vs. Franklin Templeton ETF | REX FANG vs. iShares MSCI China | REX FANG vs. Tidal Trust II |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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