Correlation Between United States and ProShares Ultra

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

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

Diversification Opportunities for United States and ProShares Ultra

0.21

Correlation Coefficient

United States  ProShares Ultra

Modest diversification

The 3 months correlation between United and ProShares is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding United States Brent and ProShares Ultra Bloomberg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Bloomberg and United States 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 United States Brent 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 Bloomberg has no effect on the direction of United States i.e., United States and ProShares Ultra go up and down completely randomly.

Pair Corralation between United States and ProShares Ultra

Considering the 90-day investment horizon United States Brent is expected to generate 0.27 times more return on investment than ProShares Ultra. However, United States Brent is 3.71 times less risky than ProShares Ultra. It trades about 0.02 of its potential returns per unit of risk. ProShares Ultra Bloomberg is currently generating about -0.05 per unit of risk. If you would invest  2,825  in United States Brent on October 6, 2024 and sell it today you would earn a total of  239.00  from holding United States Brent or generate 8.46% return on investment over 90 days.

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

United States Brent  vs.  ProShares Ultra Bloomberg

United States Brent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Brent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, United States is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

ProShares Ultra Bloomberg

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Bloomberg are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain forward indicators, ProShares Ultra may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with United States and ProShares Ultra

The main advantage of trading using opposite United States and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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 United States Brent and ProShares Ultra Bloomberg 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.