Correlation Between EA Series and ProShares Ultra

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

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

Diversification Opportunities for EA Series and ProShares Ultra

-0.11

Correlation Coefficient

EA Series  ProShares Ultra

Good diversification

The 3 months correlation between DRLL and ProShares is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding EA Series Trust 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 EA Series 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 EA Series Trust 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 EA Series i.e., EA Series and ProShares Ultra go up and down completely randomly.

Pair Corralation between EA Series and ProShares Ultra

Given the investment horizon of 90 days EA Series Trust is expected to under-perform the ProShares Ultra. But the etf apears to be less risky and, when comparing its historical volatility, EA Series Trust is 5.94 times less risky than ProShares Ultra. The etf trades about -0.58 of its potential returns per unit of risk. The ProShares Ultra Bloomberg is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  5,138  in ProShares Ultra Bloomberg on September 22, 2024 and sell it today you would lose (102.00) from holding ProShares Ultra Bloomberg or give up 1.99% of portfolio value over 90 days.

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

EA Series Trust  vs.  ProShares Ultra Bloomberg

EA Series Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EA Series Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Etf's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

ProShares Ultra Bloomberg

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Ultra Bloomberg has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, ProShares Ultra is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with EA Series and ProShares Ultra

The main advantage of trading using opposite EA Series and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EA Series 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 EA Series Trust 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.