Correlation Between ProShares Ultra and Abrdn Physical

Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Abrdn Physical 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 Abrdn Physical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ProShares Ultra Silver and abrdn Physical Silver, you can compare the effects of market volatilities on ProShares Ultra and Abrdn Physical 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 Abrdn Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Abrdn Physical.

Diversification Opportunities for ProShares Ultra and Abrdn Physical

0.98

Correlation Coefficient

ProShares Ultra  Abrdn Physical

Almost no diversification

The 3 months correlation between ProShares and Abrdn is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Silver and abrdn Physical Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on abrdn Physical Silver 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 Silver are associated (or correlated) with Abrdn Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of abrdn Physical Silver has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Abrdn Physical go up and down completely randomly.

Pair Corralation between ProShares Ultra and Abrdn Physical

Considering the 90-day investment horizon ProShares Ultra Silver is expected to generate 2.34 times more return on investment than Abrdn Physical. However, ProShares Ultra is 2.34 times more volatile than abrdn Physical Silver. It trades about 0.2 of its potential returns per unit of risk. abrdn Physical Silver is currently generating about 0.21 per unit of risk. If you would invest  3,398  in ProShares Ultra Silver on December 29, 2024 and sell it today you would earn a total of  1,371  from holding ProShares Ultra Silver or generate 40.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

ProShares Ultra Silver  vs.  abrdn Physical Silver

ProShares Ultra Silver

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Silver are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting technical and fundamental indicators, ProShares Ultra reported solid returns over the last few months and may actually be approaching a breakup point.

abrdn Physical Silver

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in abrdn Physical Silver are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Abrdn Physical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares Ultra and Abrdn Physical

The main advantage of trading using opposite ProShares Ultra and Abrdn Physical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, Abrdn Physical 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 Abrdn Physical will offset losses from the drop in Abrdn Physical's long position.

The idea behind ProShares Ultra Silver and abrdn Physical Silver 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.