Correlation Between Capital Group and ProShares Ultra

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

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

Diversification Opportunities for Capital Group and ProShares Ultra

-0.31

Correlation Coefficient

Capital Group  ProShares Ultra

Very good diversification

The 3 months correlation between Capital and ProShares is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Capital Group Core 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 Capital Group 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 Capital Group Core 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 Capital Group i.e., Capital Group and ProShares Ultra go up and down completely randomly.

Pair Corralation between Capital Group and ProShares Ultra

Given the investment horizon of 90 days Capital Group Core is expected to under-perform the ProShares Ultra. But the etf apears to be less risky and, when comparing its historical volatility, Capital Group Core is 6.29 times less risky than ProShares Ultra. The etf trades about -0.1 of its potential returns per unit of risk. The ProShares Ultra Bloomberg is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  3,811  in ProShares Ultra Bloomberg on October 4, 2024 and sell it today you would earn a total of  1,771  from holding ProShares Ultra Bloomberg or generate 46.47% return on investment over 90 days.

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

Capital Group Core  vs.  ProShares Ultra Bloomberg

Capital Group Core

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Group Core are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Capital Group is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private 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 unfluctuating forward indicators, ProShares Ultra disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capital Group and ProShares Ultra

The main advantage of trading using opposite Capital Group and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Group 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 Capital Group Core 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 Commodity Directory module to find actively traded commodities issued by global exchanges.