Correlation Between Ford and ProShares Ultra

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

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

Diversification Opportunities for Ford and ProShares Ultra

0.16

Correlation Coefficient

Ford  ProShares Ultra

Average diversification

The 3 months correlation between Ford and ProShares is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and ProShares Ultra Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Real and Ford 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 Ford Motor 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 Real has no effect on the direction of Ford i.e., Ford and ProShares Ultra go up and down completely randomly.

Pair Corralation between Ford and ProShares Ultra

Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.09 times more return on investment than ProShares Ultra. However, Ford is 1.09 times more volatile than ProShares Ultra Real. It trades about -0.01 of its potential returns per unit of risk. ProShares Ultra Real is currently generating about -0.1 per unit of risk. If you would invest  1,066  in Ford Motor on September 16, 2024 and sell it today you would lose (27.00) from holding Ford Motor or give up 2.53% of portfolio value over 90 days.

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

Ford Motor  vs.  ProShares Ultra Real

Ford Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Ford is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

ProShares Ultra Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Ultra Real has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Ford and ProShares Ultra

The main advantage of trading using opposite Ford and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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 Ford Motor and ProShares Ultra Real 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.