Correlation Between ProShares Hedge and ProShares Ultra
Can any of the company-specific risk be diversified away by investing in both ProShares Hedge 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 ProShares Hedge and ProShares Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Hedge Replication and ProShares Ultra MSCI, you can compare the effects of market volatilities on ProShares Hedge 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 ProShares Hedge with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Hedge and ProShares Ultra.
Diversification Opportunities for ProShares Hedge and ProShares Ultra
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and ProShares is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Hedge Replication and ProShares Ultra MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra MSCI and ProShares Hedge 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 ProShares Hedge Replication 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 MSCI has no effect on the direction of ProShares Hedge i.e., ProShares Hedge and ProShares Ultra go up and down completely randomly.
Pair Corralation between ProShares Hedge and ProShares Ultra
Considering the 90-day investment horizon ProShares Hedge Replication is expected to under-perform the ProShares Ultra. But the etf apears to be less risky and, when comparing its historical volatility, ProShares Hedge Replication is 5.87 times less risky than ProShares Ultra. The etf trades about -0.34 of its potential returns per unit of risk. The ProShares Ultra MSCI is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,585 in ProShares Ultra MSCI on December 10, 2024 and sell it today you would earn a total of 239.00 from holding ProShares Ultra MSCI or generate 5.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
ProShares Hedge Replication vs. ProShares Ultra MSCI
Performance |
Timeline |
ProShares Hedge Repl |
ProShares Ultra MSCI |
ProShares Hedge and ProShares Ultra Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ProShares Hedge and ProShares Ultra
The main advantage of trading using opposite ProShares Hedge and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Hedge 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.ProShares Hedge vs. ProShares Merger ETF | ProShares Hedge vs. IQ Hedge Multi Strategy | ProShares Hedge vs. ProShares Large Cap | ProShares Hedge vs. IQ Merger Arbitrage |
ProShares Ultra vs. ProShares Ultra MSCI | ProShares Ultra vs. ProShares Ultra MSCI | ProShares Ultra vs. ProShares Ultra FTSE | ProShares Ultra vs. ProShares Ultra Telecommunications |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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