Correlation Between ProShares Ultra and SPDR Bloomberg

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

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

Diversification Opportunities for ProShares Ultra and SPDR Bloomberg

0.27

Correlation Coefficient

ProShares Ultra  SPDR Bloomberg

Modest diversification

The 3 months correlation between ProShares and SPDR is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Oil and SPDR Bloomberg Barclays in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Bloomberg Barclays 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 Oil are associated (or correlated) with SPDR Bloomberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Bloomberg Barclays has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and SPDR Bloomberg go up and down completely randomly.

Pair Corralation between ProShares Ultra and SPDR Bloomberg

Considering the 90-day investment horizon ProShares Ultra Oil is expected to generate 7.02 times more return on investment than SPDR Bloomberg. However, ProShares Ultra is 7.02 times more volatile than SPDR Bloomberg Barclays. It trades about 0.12 of its potential returns per unit of risk. SPDR Bloomberg Barclays is currently generating about 0.1 per unit of risk. If you would invest  3,484  in ProShares Ultra Oil on December 28, 2024 and sell it today you would earn a total of  641.00  from holding ProShares Ultra Oil or generate 18.4% return on investment over 90 days.

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

ProShares Ultra Oil  vs.  SPDR Bloomberg Barclays

ProShares Ultra Oil

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Oil are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, ProShares Ultra reported solid returns over the last few months and may actually be approaching a breakup point.

SPDR Bloomberg Barclays

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Bloomberg Barclays are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, SPDR Bloomberg is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ProShares Ultra and SPDR Bloomberg

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

The idea behind ProShares Ultra Oil and SPDR Bloomberg Barclays 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.