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

0.91

Correlation Coefficient

MicroSectors Gold  ProShares Ultra

Almost no diversification

The 3 months correlation between MicroSectors and ProShares is 0.91. 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 generate 1.83 times more return on investment than ProShares Ultra. However, MicroSectors Gold is 1.83 times more volatile than ProShares Ultra Silver. It trades about 0.06 of its potential returns per unit of risk. ProShares Ultra Silver is currently generating about 0.02 per unit of risk. If you would invest  3,494  in MicroSectors Gold Miners on December 2, 2024 and sell it today you would earn a total of  459.00  from holding MicroSectors Gold Miners or generate 13.14% return on investment over 90 days.

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

MicroSectors Gold Miners  vs.  ProShares Ultra Silver

MicroSectors Gold Miners

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MicroSectors Gold Miners are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, MicroSectors Gold unveiled solid returns over the last few months and may actually be approaching a breakup point.

ProShares Ultra Silver

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Silver are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, ProShares Ultra is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.