Correlation Between ProShares Ultra and Tradr 2X
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Tradr 2X 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 Tradr 2X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Ultra Financials and Tradr 2X Long, you can compare the effects of market volatilities on ProShares Ultra and Tradr 2X 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 Tradr 2X. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Tradr 2X.
Diversification Opportunities for ProShares Ultra and Tradr 2X
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and Tradr is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Financials and Tradr 2X Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tradr 2X Long 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 Financials are associated (or correlated) with Tradr 2X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tradr 2X Long has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Tradr 2X go up and down completely randomly.
Pair Corralation between ProShares Ultra and Tradr 2X
Considering the 90-day investment horizon ProShares Ultra is expected to generate 1.59 times less return on investment than Tradr 2X. But when comparing it to its historical volatility, ProShares Ultra Financials is 1.1 times less risky than Tradr 2X. It trades about 0.09 of its potential returns per unit of risk. Tradr 2X Long is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,348 in Tradr 2X Long on August 30, 2024 and sell it today you would earn a total of 382.00 from holding Tradr 2X Long or generate 16.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 12.53% |
| Values | Daily Returns |
ProShares Ultra Financials vs. Tradr 2X Long
Performance |
| Timeline |
| ProShares Ultra Fina |
| Tradr 2X Long |
ProShares Ultra and Tradr 2X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and Tradr 2X
The main advantage of trading using opposite ProShares Ultra and Tradr 2X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, Tradr 2X 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 Tradr 2X will offset losses from the drop in Tradr 2X's long position.| ProShares Ultra vs. ProShares Ultra Real | ProShares Ultra vs. ProShares UltraShort Financials | ProShares Ultra vs. ProShares Ultra Basic | ProShares Ultra vs. ProShares Ultra Oil |
| Tradr 2X vs. ABIVAX Socit Anonyme | Tradr 2X vs. Morningstar Unconstrained Allocation | Tradr 2X vs. SPACE | Tradr 2X vs. Knife River |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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