Correlation Between Barclays ETN and ProShares Ultra

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

By analyzing existing cross correlation between Barclays ETN Select and ProShares Ultra Silver, you can compare the effects of market volatilities on Barclays ETN and ProShares Ultra 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 Barclays ETN with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays ETN and ProShares Ultra.

Diversification Opportunities for Barclays ETN and ProShares Ultra

-0.61

Correlation Coefficient

Barclays ETN  ProShares Ultra

Excellent diversification

The 3 months correlation between Barclays and ProShares is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Barclays ETN Select and ProShares Ultra Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Silver and Barclays ETN 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 Barclays ETN Select are associated (or correlated) with ProShares Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra Silver has no effect on the direction of Barclays ETN i.e., Barclays ETN and ProShares Ultra go up and down completely randomly.

Pair Corralation between Barclays ETN and ProShares Ultra

Given the investment horizon of 90 days Barclays ETN Select is expected to generate 0.29 times more return on investment than ProShares Ultra. However, Barclays ETN Select is 3.43 times less risky than ProShares Ultra. It trades about 0.14 of its potential returns per unit of risk. ProShares Ultra Silver is currently generating about -0.01 per unit of risk. If you would invest  2,643  in Barclays ETN Select on October 9, 2024 and sell it today you would earn a total of  250.00  from holding Barclays ETN Select or generate 9.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Barclays ETN Select  vs.  ProShares Ultra Silver

Barclays ETN Select

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barclays ETN Select are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Barclays ETN may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ProShares Ultra Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Ultra Silver has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, ProShares Ultra is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Barclays ETN and ProShares Ultra

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

The idea behind Barclays ETN Select and ProShares Ultra 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.