Correlation Between ProShares Ultra and Franklin FTSE
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Franklin FTSE 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 Franklin FTSE 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 Franklin FTSE Europe, you can compare the effects of market volatilities on ProShares Ultra and Franklin FTSE 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 Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Franklin FTSE.
Diversification Opportunities for ProShares Ultra and Franklin FTSE
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ProShares and Franklin is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Semiconductors and Franklin FTSE Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE Europe 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 Franklin FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin FTSE Europe has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Franklin FTSE go up and down completely randomly.
Pair Corralation between ProShares Ultra and Franklin FTSE
Considering the 90-day investment horizon ProShares Ultra Semiconductors is expected to generate 4.11 times more return on investment than Franklin FTSE. However, ProShares Ultra is 4.11 times more volatile than Franklin FTSE Europe. It trades about 0.04 of its potential returns per unit of risk. Franklin FTSE Europe is currently generating about -0.09 per unit of risk. If you would invest 6,191 in ProShares Ultra Semiconductors on September 1, 2024 and sell it today you would earn a total of 109.00 from holding ProShares Ultra Semiconductors or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
ProShares Ultra Semiconductors vs. Franklin FTSE Europe
Performance |
| Timeline |
| ProShares Ultra Semi |
| Franklin FTSE Europe |
ProShares Ultra and Franklin FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and Franklin FTSE
The main advantage of trading using opposite ProShares Ultra and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, Franklin FTSE 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 Franklin FTSE will offset losses from the drop in Franklin FTSE'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 |
| Franklin FTSE vs. Franklin FTSE United | Franklin FTSE vs. SPDR Portfolio Europe | Franklin FTSE vs. Franklin FTSE Germany | Franklin FTSE vs. Franklin FTSE Japan |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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