Correlation Between ProShares Ultra and Global X

Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Global X 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 Global X 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 Global X Interest, you can compare the effects of market volatilities on ProShares Ultra and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Global X.

Diversification Opportunities for ProShares Ultra and Global X

0.23

Correlation Coefficient

ProShares Ultra  Global X

Modest diversification

The 3 months correlation between ProShares and Global is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Oil and Global X Interest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Interest 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Interest has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Global X go up and down completely randomly.

Pair Corralation between ProShares Ultra and Global X

Considering the 90-day investment horizon ProShares Ultra Oil is expected to generate 6.79 times more return on investment than Global X. However, ProShares Ultra is 6.79 times more volatile than Global X Interest. It trades about 0.12 of its potential returns per unit of risk. Global X Interest is currently generating about 0.19 per unit of risk. If you would invest  3,484  in ProShares Ultra Oil on December 29, 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	98.39%
Values	Daily Returns

ProShares Ultra Oil  vs.  Global X Interest

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.

Global X Interest

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Interest are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Global X is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with ProShares Ultra and Global X

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

The idea behind ProShares Ultra Oil and Global X Interest 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.