Correlation Between ProShares Ultra and Freedom Day
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Freedom Day 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 Freedom Day 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 Freedom Day Dividend, you can compare the effects of market volatilities on ProShares Ultra and Freedom Day 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 Freedom Day. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Freedom Day.
Diversification Opportunities for ProShares Ultra and Freedom Day
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and Freedom is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Semiconductors and Freedom Day Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Day Dividend 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 Freedom Day. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Day Dividend has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Freedom Day go up and down completely randomly.
Pair Corralation between ProShares Ultra and Freedom Day
Considering the 90-day investment horizon ProShares Ultra Semiconductors is expected to generate 6.5 times more return on investment than Freedom Day. However, ProShares Ultra is 6.5 times more volatile than Freedom Day Dividend. It trades about 0.11 of its potential returns per unit of risk. Freedom Day Dividend is currently generating about 0.15 per unit of risk. If you would invest 2,220 in ProShares Ultra Semiconductors on August 26, 2024 and sell it today you would earn a total of 4,310 from holding ProShares Ultra Semiconductors or generate 194.14% 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. Freedom Day Dividend
Performance |
| Timeline |
| ProShares Ultra Semi |
| Freedom Day Dividend |
ProShares Ultra and Freedom Day Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and Freedom Day
The main advantage of trading using opposite ProShares Ultra and Freedom Day positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, Freedom Day 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 Freedom Day will offset losses from the drop in Freedom Day'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 |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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