Correlation Between Nasdaq and ProShares Ultra

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

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

Diversification Opportunities for Nasdaq and ProShares Ultra

-0.85

Correlation Coefficient

Nasdaq  ProShares Ultra

Pay attention - limited upside

The 3 months correlation between Nasdaq and ProShares is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc 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 Nasdaq 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 Nasdaq Inc 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 Nasdaq i.e., Nasdaq and ProShares Ultra go up and down completely randomly.

Pair Corralation between Nasdaq and ProShares Ultra

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the ProShares Ultra. But the stock apears to be less risky and, when comparing its historical volatility, Nasdaq Inc is 1.73 times less risky than ProShares Ultra. The stock trades about -0.26 of its potential returns per unit of risk. The ProShares Ultra MSCI is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  5,257  in ProShares Ultra MSCI on September 29, 2024 and sell it today you would lose (52.00) from holding ProShares Ultra MSCI or give up 0.99% of portfolio value over 90 days.

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

Nasdaq Inc  vs.  ProShares Ultra MSCI

Nasdaq Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ProShares Ultra MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Ultra MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Etf's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with Nasdaq and ProShares Ultra

The main advantage of trading using opposite Nasdaq and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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 Nasdaq Inc and ProShares Ultra MSCI 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.