Correlation Between ProShares Ultra and IShares SP
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and IShares SP 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 SP 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 SP 100, you can compare the effects of market volatilities on ProShares Ultra and IShares SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and IShares SP.
Diversification Opportunities for ProShares Ultra and IShares SP
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and IShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Semiconductors and iShares SP 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP 100 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 SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP 100 has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and IShares SP go up and down completely randomly.
Pair Corralation between ProShares Ultra and IShares SP
Considering the 90-day investment horizon ProShares Ultra Semiconductors is expected to under-perform the IShares SP. In addition to that, ProShares Ultra is 4.38 times more volatile than iShares SP 100. It trades about -0.08 of its total potential returns per unit of risk. iShares SP 100 is currently generating about 0.11 per unit of volatility. If you would invest 28,158 in iShares SP 100 on August 28, 2024 and sell it today you would earn a total of 577.00 from holding iShares SP 100 or generate 2.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra Semiconductors vs. iShares SP 100
Performance |
| Timeline |
| ProShares Ultra Semi |
| iShares SP 100 |
ProShares Ultra and IShares SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and IShares SP
The main advantage of trading using opposite ProShares Ultra and IShares SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, IShares SP 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 SP will offset losses from the drop in IShares SP'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 |
| IShares SP vs. iShares Russell 1000 | IShares SP vs. iShares SP Mid Cap | IShares SP vs. iShares Russell 3000 | IShares SP vs. iShares SP Mid Cap |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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