Correlation Between GraniteShares 15x and ProShares UltraPro

Can any of the company-specific risk be diversified away by investing in both GraniteShares 15x and ProShares UltraPro 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 GraniteShares 15x and ProShares UltraPro into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GraniteShares 15x Long and ProShares UltraPro Short, you can compare the effects of market volatilities on GraniteShares 15x and ProShares UltraPro 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 GraniteShares 15x with a short position of ProShares UltraPro. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares 15x and ProShares UltraPro.

Diversification Opportunities for GraniteShares 15x and ProShares UltraPro

-0.7

Correlation Coefficient

GraniteShares 15x  ProShares UltraPro

Excellent diversification

The 3 months correlation between GraniteShares and ProShares is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 15x Long and ProShares UltraPro Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraPro Short and GraniteShares 15x 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 GraniteShares 15x Long are associated (or correlated) with ProShares UltraPro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraPro Short has no effect on the direction of GraniteShares 15x i.e., GraniteShares 15x and ProShares UltraPro go up and down completely randomly.

Pair Corralation between GraniteShares 15x and ProShares UltraPro

Given the investment horizon of 90 days GraniteShares 15x Long is expected to generate 1.69 times more return on investment than ProShares UltraPro. However, GraniteShares 15x is 1.69 times more volatile than ProShares UltraPro Short. It trades about 0.09 of its potential returns per unit of risk. ProShares UltraPro Short is currently generating about -0.16 per unit of risk. If you would invest  5,677  in GraniteShares 15x Long on September 12, 2024 and sell it today you would earn a total of  1,139  from holding GraniteShares 15x Long or generate 20.06% return on investment over 90 days.

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

GraniteShares 15x Long  vs.  ProShares UltraPro Short

GraniteShares 15x Long

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares 15x Long are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental indicators, GraniteShares 15x disclosed solid returns over the last few months and may actually be approaching a breakup point.

ProShares UltraPro Short

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares UltraPro Short has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with GraniteShares 15x and ProShares UltraPro

The main advantage of trading using opposite GraniteShares 15x and ProShares UltraPro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares 15x position performs unexpectedly, ProShares UltraPro 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 UltraPro will offset losses from the drop in ProShares UltraPro's long position.

The idea behind GraniteShares 15x Long and ProShares UltraPro Short 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.