Correlation Between ProShares Ultra and IPath Series
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and IPath Series 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 Ultra and IPath Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Ultra Telecommunications and iPath Series B, you can compare the effects of market volatilities on ProShares Ultra and IPath Series 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 Ultra with a short position of IPath Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and IPath Series.
Diversification Opportunities for ProShares Ultra and IPath Series
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and IPath is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Telecommunicat and iPath Series B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iPath Series B and ProShares Ultra 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 Ultra Telecommunications are associated (or correlated) with IPath Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iPath Series B has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and IPath Series go up and down completely randomly.
Pair Corralation between ProShares Ultra and IPath Series
Considering the 90-day investment horizon ProShares Ultra Telecommunications is expected to generate 0.46 times more return on investment than IPath Series. However, ProShares Ultra Telecommunications is 2.18 times less risky than IPath Series. It trades about 0.31 of its potential returns per unit of risk. iPath Series B is currently generating about -0.05 per unit of risk. If you would invest 6,691 in ProShares Ultra Telecommunications on September 12, 2024 and sell it today you would earn a total of 2,292 from holding ProShares Ultra Telecommunications or generate 34.25% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
ProShares Ultra Telecommunicat vs. iPath Series B
Performance |
Timeline |
ProShares Ultra Tele |
iPath Series B |
ProShares Ultra and IPath Series Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ProShares Ultra and IPath Series
The main advantage of trading using opposite ProShares Ultra and IPath Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, IPath Series 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 IPath Series will offset losses from the drop in IPath Series' long position.ProShares Ultra vs. ProShares Ultra SP500 | ProShares Ultra vs. Direxion Daily SP500 | ProShares Ultra vs. ProShares Ultra QQQ | ProShares Ultra vs. ProShares UltraPro SP500 |
IPath Series vs. ProShares Ultra Euro | IPath Series vs. ProShares UltraShort Yen | IPath Series vs. ProShares Ultra Telecommunications | IPath Series vs. ProShares Ultra Consumer |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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