Correlation Between ProShares Ultra and American Century
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and American Century 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 American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Ultra Yen and American Century ETF, you can compare the effects of market volatilities on ProShares Ultra and American Century 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 American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and American Century.
Diversification Opportunities for ProShares Ultra and American Century
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and American is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Yen and American Century ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century ETF 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 Yen are associated (or correlated) with American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century ETF has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and American Century go up and down completely randomly.
Pair Corralation between ProShares Ultra and American Century
Considering the 90-day investment horizon ProShares Ultra is expected to generate 1.75 times less return on investment than American Century. In addition to that, ProShares Ultra is 1.86 times more volatile than American Century ETF. It trades about 0.07 of its total potential returns per unit of risk. American Century ETF is currently generating about 0.23 per unit of volatility. If you would invest 6,698 in American Century ETF on August 30, 2024 and sell it today you would earn a total of 310.00 from holding American Century ETF or generate 4.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra Yen vs. American Century ETF
Performance |
| Timeline |
| ProShares Ultra Yen |
| American Century ETF |
ProShares Ultra and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and American Century
The main advantage of trading using opposite ProShares Ultra and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century's long position.| ProShares Ultra vs. ProShares Ultra Euro | ProShares Ultra vs. ProShares UltraShort Yen | ProShares Ultra vs. ProShares Ultra Telecommunications | ProShares Ultra vs. ProShares Ultra Consumer |
| American Century vs. FT Vest Equity | American Century vs. Northern Lights | American Century vs. Dimensional International High | American Century vs. First Trust Exchange Traded |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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