Correlation Between ProShares Ultra and FlexShares Quality
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and FlexShares Quality 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 FlexShares Quality 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 FlexShares Quality Low, you can compare the effects of market volatilities on ProShares Ultra and FlexShares Quality 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 FlexShares Quality. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and FlexShares Quality.
Diversification Opportunities for ProShares Ultra and FlexShares Quality
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and FlexShares is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Yen and FlexShares Quality Low in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares Quality Low 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 FlexShares Quality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares Quality Low has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and FlexShares Quality go up and down completely randomly.
Pair Corralation between ProShares Ultra and FlexShares Quality
Considering the 90-day investment horizon ProShares Ultra is expected to generate 2.06 times less return on investment than FlexShares Quality. In addition to that, ProShares Ultra is 2.63 times more volatile than FlexShares Quality Low. It trades about 0.03 of its total potential returns per unit of risk. FlexShares Quality Low is currently generating about 0.16 per unit of volatility. If you would invest 6,055 in FlexShares Quality Low on September 1, 2024 and sell it today you would earn a total of 755.00 from holding FlexShares Quality Low or generate 12.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
ProShares Ultra Yen vs. FlexShares Quality Low
Performance |
| Timeline |
| ProShares Ultra Yen |
| FlexShares Quality Low |
ProShares Ultra and FlexShares Quality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and FlexShares Quality
The main advantage of trading using opposite ProShares Ultra and FlexShares Quality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, FlexShares Quality 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 FlexShares Quality will offset losses from the drop in FlexShares Quality's long position.| ProShares Ultra vs. ProShares VIX Mid Term | ProShares Ultra vs. iPath Series B | ProShares Ultra vs. ProShares Short Russell2000 |
| FlexShares Quality vs. Vanguard Total Stock | FlexShares Quality vs. SPDR SP 500 | FlexShares Quality vs. iShares Core SP | FlexShares Quality vs. Vanguard Dividend Appreciation |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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