Correlation Between ProShares Ultra and VictoryShares WestEnd

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Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and VictoryShares WestEnd 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 VictoryShares WestEnd 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 VictoryShares WestEnd Sector, you can compare the effects of market volatilities on ProShares Ultra and VictoryShares WestEnd 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 VictoryShares WestEnd. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and VictoryShares WestEnd.

Diversification Opportunities for ProShares Ultra and VictoryShares WestEnd

-0.84
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between ProShares and VictoryShares is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Yen and VictoryShares WestEnd Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares WestEnd 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 VictoryShares WestEnd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares WestEnd has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and VictoryShares WestEnd go up and down completely randomly.

Pair Corralation between ProShares Ultra and VictoryShares WestEnd

Considering the 90-day investment horizon ProShares Ultra Yen is expected to under-perform the VictoryShares WestEnd. In addition to that, ProShares Ultra is 1.98 times more volatile than VictoryShares WestEnd Sector. It trades about -0.12 of its total potential returns per unit of risk. VictoryShares WestEnd Sector is currently generating about 0.17 per unit of volatility. If you would invest  3,959  in VictoryShares WestEnd Sector on August 26, 2024 and sell it today you would earn a total of  114.00  from holding VictoryShares WestEnd Sector or generate 2.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

ProShares Ultra Yen  vs.  VictoryShares WestEnd Sector

 Performance 
       Timeline  
ProShares Ultra Yen 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ProShares Ultra Yen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's fundamental indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the ETF venture institutional investors.
VictoryShares WestEnd 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in VictoryShares WestEnd Sector are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, VictoryShares WestEnd is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

ProShares Ultra and VictoryShares WestEnd Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ProShares Ultra and VictoryShares WestEnd

The main advantage of trading using opposite ProShares Ultra and VictoryShares WestEnd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, VictoryShares WestEnd 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 VictoryShares WestEnd will offset losses from the drop in VictoryShares WestEnd's long position.
The idea behind ProShares Ultra Yen and VictoryShares WestEnd Sector pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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