Correlation Between MicroSectors Gold and ProShares Ultra

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

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

Diversification Opportunities for MicroSectors Gold and ProShares Ultra

-0.92

Correlation Coefficient

MicroSectors Gold  ProShares Ultra

Pay attention - limited upside

The 3 months correlation between MicroSectors and ProShares is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors Gold Miners and ProShares Ultra Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Silver and MicroSectors Gold 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 MicroSectors Gold Miners 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 Silver has no effect on the direction of MicroSectors Gold i.e., MicroSectors Gold and ProShares Ultra go up and down completely randomly.

Pair Corralation between MicroSectors Gold and ProShares Ultra

Given the investment horizon of 90 days MicroSectors Gold Miners is expected to under-perform the ProShares Ultra. In addition to that, MicroSectors Gold is 1.77 times more volatile than ProShares Ultra Silver. It trades about -0.28 of its total potential returns per unit of risk. ProShares Ultra Silver is currently generating about 0.2 per unit of volatility. If you would invest  3,398  in ProShares Ultra Silver on December 29, 2024 and sell it today you would earn a total of  1,371  from holding ProShares Ultra Silver or generate 40.35% return on investment over 90 days.

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

MicroSectors Gold Miners  vs.  ProShares Ultra Silver

MicroSectors Gold Miners

Risk-Adjusted Performance

Very Weak

Over the last 90 days MicroSectors Gold Miners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

ProShares Ultra Silver

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Silver are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting technical and fundamental indicators, ProShares Ultra reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MicroSectors Gold and ProShares Ultra

The main advantage of trading using opposite MicroSectors Gold and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors Gold 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 MicroSectors Gold Miners and ProShares Ultra Silver 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.