Correlation Between ProShares Ultra and Janus Henderson

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

By analyzing existing cross correlation between ProShares Ultra QQQ and Janus Henderson Mortgage Backed, you can compare the effects of market volatilities on ProShares Ultra and Janus Henderson 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 Janus Henderson. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Janus Henderson.

Diversification Opportunities for ProShares Ultra and Janus Henderson

0.06

Correlation Coefficient

ProShares Ultra  Janus Henderson

Significant diversification

The 3 months correlation between ProShares and Janus is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra QQQ and Janus Henderson Mortgage Backe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Henderson Mort 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 QQQ are associated (or correlated) with Janus Henderson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Henderson Mort has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Janus Henderson go up and down completely randomly.

Pair Corralation between ProShares Ultra and Janus Henderson

Considering the 90-day investment horizon ProShares Ultra QQQ is expected to under-perform the Janus Henderson. In addition to that, ProShares Ultra is 6.54 times more volatile than Janus Henderson Mortgage Backed. It trades about -0.12 of its total potential returns per unit of risk. Janus Henderson Mortgage Backed is currently generating about 0.35 per unit of volatility. If you would invest  4,429  in Janus Henderson Mortgage Backed on December 2, 2024 and sell it today you would earn a total of  113.00  from holding Janus Henderson Mortgage Backed or generate 2.55% return on investment over 90 days.

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

ProShares Ultra QQQ  vs.  Janus Henderson Mortgage Backe

ProShares Ultra QQQ

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Ultra QQQ has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, ProShares Ultra is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Janus Henderson Mort

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Henderson Mortgage Backed are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, Janus Henderson is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ProShares Ultra and Janus Henderson

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

The idea behind ProShares Ultra QQQ and Janus Henderson Mortgage Backed 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.