Correlation Between ProShares Ultra and First Trust
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and First Trust 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 First Trust 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 First Trust Nasdaq, you can compare the effects of market volatilities on ProShares Ultra and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and First Trust.
Diversification Opportunities for ProShares Ultra and First Trust
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and First is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Semiconductors and First Trust Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Nasdaq 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Nasdaq has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and First Trust go up and down completely randomly.
Pair Corralation between ProShares Ultra and First Trust
Considering the 90-day investment horizon ProShares Ultra Semiconductors is expected to under-perform the First Trust. In addition to that, ProShares Ultra is 5.74 times more volatile than First Trust Nasdaq. It trades about -0.15 of its total potential returns per unit of risk. First Trust Nasdaq is currently generating about 0.01 per unit of volatility. If you would invest 2,451 in First Trust Nasdaq on August 30, 2024 and sell it today you would earn a total of 4.00 from holding First Trust Nasdaq or generate 0.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra Semiconductors vs. First Trust Nasdaq
Performance |
| Timeline |
| ProShares Ultra Semi |
| First Trust Nasdaq |
ProShares Ultra and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and First Trust
The main advantage of trading using opposite ProShares Ultra and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust'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 |
| First Trust vs. Fidelity MSCI Utilities | First Trust vs. Fidelity MSCI Industrials | First Trust vs. Fidelity MSCI Materials | First Trust vs. Fidelity MSCI Consumer |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |