Correlation Between ProShares Ultra and SPDR Morgan
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and SPDR Morgan 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 SPDR Morgan 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 SPDR Morgan Stanley, you can compare the effects of market volatilities on ProShares Ultra and SPDR Morgan 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 SPDR Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and SPDR Morgan.
Diversification Opportunities for ProShares Ultra and SPDR Morgan
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between ProShares and SPDR is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Semiconductors and SPDR Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Morgan Stanley 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 SPDR Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Morgan Stanley has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and SPDR Morgan go up and down completely randomly.
Pair Corralation between ProShares Ultra and SPDR Morgan
Considering the 90-day investment horizon ProShares Ultra Semiconductors is expected to generate 3.4 times more return on investment than SPDR Morgan. However, ProShares Ultra is 3.4 times more volatile than SPDR Morgan Stanley. It trades about 0.1 of its potential returns per unit of risk. SPDR Morgan Stanley is currently generating about 0.11 per unit of risk. If you would invest 1,164 in ProShares Ultra Semiconductors on November 19, 2024 and sell it today you would earn a total of 5,438 from holding ProShares Ultra Semiconductors or generate 467.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
ProShares Ultra Semiconductors vs. SPDR Morgan Stanley
Performance |
| Timeline |
| ProShares Ultra Semi |
| SPDR Morgan Stanley |
ProShares Ultra and SPDR Morgan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and SPDR Morgan
The main advantage of trading using opposite ProShares Ultra and SPDR Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, SPDR Morgan 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 SPDR Morgan will offset losses from the drop in SPDR Morgan'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 |
| SPDR Morgan vs. Vanguard Information Technology | SPDR Morgan vs. Technology Select Sector | SPDR Morgan vs. iShares Technology ETF | SPDR Morgan vs. VanEck Semiconductor ETF |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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