Correlation Between ProShares Ultra and VelocityShares
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and VelocityShares 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 VelocityShares 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 VelocityShares 3x Long, you can compare the effects of market volatilities on ProShares Ultra and VelocityShares 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 VelocityShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and VelocityShares.
Diversification Opportunities for ProShares Ultra and VelocityShares
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and VelocityShares is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Yen and VelocityShares 3x Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VelocityShares 3x 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 Yen are associated (or correlated) with VelocityShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VelocityShares 3x Long has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and VelocityShares go up and down completely randomly.
Pair Corralation between ProShares Ultra and VelocityShares
If you would invest 4,426 in VelocityShares 3x Long on August 28, 2024 and sell it today you would earn a total of 0.00 from holding VelocityShares 3x Long or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
ProShares Ultra Yen vs. VelocityShares 3x Long
Performance |
| Timeline |
| ProShares Ultra Yen |
| VelocityShares 3x Long |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
ProShares Ultra and VelocityShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and VelocityShares
The main advantage of trading using opposite ProShares Ultra and VelocityShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, VelocityShares 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 VelocityShares will offset losses from the drop in VelocityShares' long position.The idea behind ProShares Ultra Yen and VelocityShares 3x Long 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.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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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