Correlation Between ProShares Ultra and Energy Select
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Energy Select 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 Energy Select 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 Energy Select Sector, you can compare the effects of market volatilities on ProShares Ultra and Energy Select 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 Energy Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Energy Select.
Diversification Opportunities for ProShares Ultra and Energy Select
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ProShares and Energy is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Yen and Energy Select Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Select Sector 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 Energy Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Select Sector has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Energy Select go up and down completely randomly.
Pair Corralation between ProShares Ultra and Energy Select
Considering the 90-day investment horizon ProShares Ultra Yen is expected to generate 0.99 times more return on investment than Energy Select. However, ProShares Ultra Yen is 1.01 times less risky than Energy Select. It trades about 0.15 of its potential returns per unit of risk. Energy Select Sector is currently generating about -0.15 per unit of risk. If you would invest 2,055 in ProShares Ultra Yen on November 18, 2024 and sell it today you would earn a total of 84.00 from holding ProShares Ultra Yen or generate 4.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra Yen vs. Energy Select Sector
Performance |
| Timeline |
| ProShares Ultra Yen |
| Energy Select Sector |
ProShares Ultra and Energy Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and Energy Select
The main advantage of trading using opposite ProShares Ultra and Energy Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, Energy Select 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 Energy Select will offset losses from the drop in Energy Select'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 |
| Energy Select vs. Financial Select Sector | Energy Select vs. Health Care Select | Energy Select vs. Technology Select Sector | Energy Select vs. Utilities Select Sector |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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