Correlation Between ProShares Ultra and IShares Trust
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and IShares 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 IShares 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 iShares Trust, you can compare the effects of market volatilities on ProShares Ultra and IShares 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 IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and IShares Trust.
Diversification Opportunities for ProShares Ultra and IShares Trust
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ProShares and IShares is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Semiconductors and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 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 IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and IShares Trust go up and down completely randomly.
Pair Corralation between ProShares Ultra and IShares Trust
Considering the 90-day investment horizon ProShares Ultra Semiconductors is expected to under-perform the IShares Trust. In addition to that, ProShares Ultra is 6.84 times more volatile than iShares Trust. It trades about -0.04 of its total potential returns per unit of risk. iShares Trust is currently generating about 0.05 per unit of volatility. If you would invest 3,236 in iShares Trust on September 13, 2024 and sell it today you would earn a total of 40.00 from holding iShares Trust or generate 1.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra Semiconductors vs. iShares Trust
Performance |
| Timeline |
| ProShares Ultra Semi |
| iShares Trust |
ProShares Ultra and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and IShares Trust
The main advantage of trading using opposite ProShares Ultra and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, IShares 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 IShares Trust will offset losses from the drop in IShares Trust'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 |
| IShares Trust vs. First Trust Multi Asset | IShares Trust vs. Collaborative Investment Series | IShares Trust vs. EA Series Trust | IShares Trust vs. Aptus Defined Risk |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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