Correlation Between GraniteShares 175x and ProShares Ultra

Can any of the company-specific risk be diversified away by investing in both GraniteShares 175x 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 GraniteShares 175x and ProShares Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GraniteShares 175x Long and ProShares Ultra SP500, you can compare the effects of market volatilities on GraniteShares 175x 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 GraniteShares 175x with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares 175x and ProShares Ultra.

Diversification Opportunities for GraniteShares 175x and ProShares Ultra

-0.35

Correlation Coefficient

GraniteShares 175x  ProShares Ultra

Very good diversification

The 3 months correlation between GraniteShares and ProShares is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 175x Long and ProShares Ultra SP500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra SP500 and GraniteShares 175x 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 GraniteShares 175x Long 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 SP500 has no effect on the direction of GraniteShares 175x i.e., GraniteShares 175x and ProShares Ultra go up and down completely randomly.

Pair Corralation between GraniteShares 175x and ProShares Ultra

Given the investment horizon of 90 days GraniteShares 175x is expected to generate 1.11 times less return on investment than ProShares Ultra. In addition to that, GraniteShares 175x is 4.48 times more volatile than ProShares Ultra SP500. It trades about 0.04 of its total potential returns per unit of risk. ProShares Ultra SP500 is currently generating about 0.18 per unit of volatility. If you would invest  8,616  in ProShares Ultra SP500 on September 13, 2024 and sell it today you would earn a total of  1,338  from holding ProShares Ultra SP500 or generate 15.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

GraniteShares 175x Long  vs.  ProShares Ultra SP500

GraniteShares 175x Long

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares 175x Long are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental drivers, GraniteShares 175x showed solid returns over the last few months and may actually be approaching a breakup point.

ProShares Ultra SP500

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra SP500 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, ProShares Ultra displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GraniteShares 175x and ProShares Ultra

The main advantage of trading using opposite GraniteShares 175x and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares 175x 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 GraniteShares 175x Long and ProShares Ultra SP500 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.