Correlation Between ProShares Ultra and Invesco ESG
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Invesco ESG 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 Invesco ESG 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 Invesco ESG NASDAQ, you can compare the effects of market volatilities on ProShares Ultra and Invesco ESG 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 Invesco ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Invesco ESG.
Diversification Opportunities for ProShares Ultra and Invesco ESG
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and Invesco is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Semiconductors and Invesco ESG NASDAQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco ESG 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 Invesco ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco ESG NASDAQ has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Invesco ESG go up and down completely randomly.
Pair Corralation between ProShares Ultra and Invesco ESG
Considering the 90-day investment horizon ProShares Ultra Semiconductors is expected to generate 5.25 times more return on investment than Invesco ESG. However, ProShares Ultra is 5.25 times more volatile than Invesco ESG NASDAQ. It trades about 0.03 of its potential returns per unit of risk. Invesco ESG NASDAQ is currently generating about 0.1 per unit of risk. If you would invest 6,141 in ProShares Ultra Semiconductors on September 1, 2024 and sell it today you would earn a total of 159.00 from holding ProShares Ultra Semiconductors or generate 2.59% 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. Invesco ESG NASDAQ
Performance |
| Timeline |
| ProShares Ultra Semi |
| Invesco ESG NASDAQ |
ProShares Ultra and Invesco ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and Invesco ESG
The main advantage of trading using opposite ProShares Ultra and Invesco ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, Invesco ESG 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 Invesco ESG will offset losses from the drop in Invesco ESG'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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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