Correlation Between ProShares Ultra and VanEck Morningstar
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and VanEck Morningstar 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 VanEck Morningstar 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 VanEck Morningstar Durable, you can compare the effects of market volatilities on ProShares Ultra and VanEck Morningstar 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 VanEck Morningstar. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and VanEck Morningstar.
Diversification Opportunities for ProShares Ultra and VanEck Morningstar
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and VanEck is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Yen and VanEck Morningstar Durable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Morningstar 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 VanEck Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Morningstar has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and VanEck Morningstar go up and down completely randomly.
Pair Corralation between ProShares Ultra and VanEck Morningstar
Considering the 90-day investment horizon ProShares Ultra is expected to generate 8.27 times less return on investment than VanEck Morningstar. In addition to that, ProShares Ultra is 1.39 times more volatile than VanEck Morningstar Durable. It trades about 0.02 of its total potential returns per unit of risk. VanEck Morningstar Durable is currently generating about 0.22 per unit of volatility. If you would invest 3,246 in VanEck Morningstar Durable on October 21, 2024 and sell it today you would earn a total of 82.00 from holding VanEck Morningstar Durable or generate 2.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra Yen vs. VanEck Morningstar Durable
Performance |
| Timeline |
| ProShares Ultra Yen |
| VanEck Morningstar |
ProShares Ultra and VanEck Morningstar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and VanEck Morningstar
The main advantage of trading using opposite ProShares Ultra and VanEck Morningstar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, VanEck Morningstar 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 VanEck Morningstar will offset losses from the drop in VanEck Morningstar'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 |
| VanEck Morningstar vs. Vanguard Value Index | VanEck Morningstar vs. Vanguard High Dividend | VanEck Morningstar vs. iShares Russell 1000 | VanEck Morningstar vs. iShares Core Dividend |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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