Correlation Between ProShares Ultra and JPMorgan Diversified
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and JPMorgan Diversified 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 JPMorgan Diversified 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 JPMorgan Diversified Return, you can compare the effects of market volatilities on ProShares Ultra and JPMorgan Diversified 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 JPMorgan Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and JPMorgan Diversified.
Diversification Opportunities for ProShares Ultra and JPMorgan Diversified
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and JPMorgan is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Semiconductors and JPMorgan Diversified Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Diversified 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 JPMorgan Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Diversified has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and JPMorgan Diversified go up and down completely randomly.
Pair Corralation between ProShares Ultra and JPMorgan Diversified
Considering the 90-day investment horizon ProShares Ultra Semiconductors is expected to generate 6.72 times more return on investment than JPMorgan Diversified. However, ProShares Ultra is 6.72 times more volatile than JPMorgan Diversified Return. It trades about 0.09 of its potential returns per unit of risk. JPMorgan Diversified Return is currently generating about 0.11 per unit of risk. If you would invest 2,072 in ProShares Ultra Semiconductors on August 28, 2024 and sell it today you would earn a total of 4,204 from holding ProShares Ultra Semiconductors or generate 202.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra Semiconductors vs. JPMorgan Diversified Return
Performance |
| Timeline |
| ProShares Ultra Semi |
| JPMorgan Diversified |
ProShares Ultra and JPMorgan Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and JPMorgan Diversified
The main advantage of trading using opposite ProShares Ultra and JPMorgan Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, JPMorgan Diversified 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 JPMorgan Diversified will offset losses from the drop in JPMorgan Diversified's long position.| ProShares Ultra vs. Direxion Daily SP | ProShares Ultra vs. Direxion Daily Semiconductor | ProShares Ultra vs. Direxion Daily Semiconductor |
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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