Correlation Between VanEck Junior and ProShares UltraShort

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

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

Diversification Opportunities for VanEck Junior and ProShares UltraShort

-0.88

Correlation Coefficient

VanEck Junior  ProShares UltraShort

Pay attention - limited upside

The 3 months correlation between VanEck and ProShares is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Junior Gold and ProShares UltraShort Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort Gold and VanEck Junior 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 VanEck Junior Gold are associated (or correlated) with ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort Gold has no effect on the direction of VanEck Junior i.e., VanEck Junior and ProShares UltraShort go up and down completely randomly.

Pair Corralation between VanEck Junior and ProShares UltraShort

Given the investment horizon of 90 days VanEck Junior Gold is expected to under-perform the ProShares UltraShort. In addition to that, VanEck Junior is 1.04 times more volatile than ProShares UltraShort Gold. It trades about -0.06 of its total potential returns per unit of risk. ProShares UltraShort Gold is currently generating about 0.02 per unit of volatility. If you would invest  1,733  in ProShares UltraShort Gold on September 30, 2024 and sell it today you would earn a total of  34.00  from holding ProShares UltraShort Gold or generate 1.96% return on investment over 90 days.

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

VanEck Junior Gold  vs.  ProShares UltraShort Gold

VanEck Junior Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Junior Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Etf's basic indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the ETF firm stakeholders.

ProShares UltraShort Gold

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares UltraShort Gold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, ProShares UltraShort is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with VanEck Junior and ProShares UltraShort

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

The idea behind VanEck Junior Gold and ProShares UltraShort Gold 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.