Correlation Between ProShares Ultra and Consumer Staples
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Consumer Staples 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 Consumer Staples 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 Consumer Staples Select, you can compare the effects of market volatilities on ProShares Ultra and Consumer Staples 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 Consumer Staples. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Consumer Staples.
Diversification Opportunities for ProShares Ultra and Consumer Staples
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and Consumer is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Semiconductors and Consumer Staples Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Staples Select 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 Consumer Staples. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Staples Select has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Consumer Staples go up and down completely randomly.
Pair Corralation between ProShares Ultra and Consumer Staples
Considering the 90-day investment horizon ProShares Ultra Semiconductors is expected to under-perform the Consumer Staples. In addition to that, ProShares Ultra is 5.97 times more volatile than Consumer Staples Select. It trades about -0.08 of its total potential returns per unit of risk. Consumer Staples Select is currently generating about 0.09 per unit of volatility. If you would invest 8,121 in Consumer Staples Select on August 28, 2024 and sell it today you would earn a total of 108.00 from holding Consumer Staples Select or generate 1.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra Semiconductors vs. Consumer Staples Select
Performance |
| Timeline |
| ProShares Ultra Semi |
| Consumer Staples Select |
ProShares Ultra and Consumer Staples Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and Consumer Staples
The main advantage of trading using opposite ProShares Ultra and Consumer Staples positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, Consumer Staples 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 Consumer Staples will offset losses from the drop in Consumer Staples' 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 |
| Consumer Staples vs. Vanguard Consumer Discretionary | Consumer Staples vs. Vanguard Utilities Index | Consumer Staples vs. Vanguard Industrials Index | Consumer Staples vs. Vanguard Materials Index |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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