Correlation Between ProShares Ultra and VanEck Vietnam

Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and VanEck Vietnam 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 VanEck Vietnam 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 VanEck Vietnam ETF, you can compare the effects of market volatilities on ProShares Ultra and VanEck Vietnam 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 VanEck Vietnam. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and VanEck Vietnam.

Diversification Opportunities for ProShares Ultra and VanEck Vietnam

0.09

Correlation Coefficient

ProShares Ultra  VanEck Vietnam

Significant diversification

The 3 months correlation between ProShares and VanEck is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra QQQ and VanEck Vietnam ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vietnam ETF 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 VanEck Vietnam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Vietnam ETF has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and VanEck Vietnam go up and down completely randomly.

Pair Corralation between ProShares Ultra and VanEck Vietnam

Considering the 90-day investment horizon ProShares Ultra QQQ is expected to under-perform the VanEck Vietnam. In addition to that, ProShares Ultra is 2.57 times more volatile than VanEck Vietnam ETF. It trades about -0.02 of its total potential returns per unit of risk. VanEck Vietnam ETF is currently generating about 0.05 per unit of volatility. If you would invest  1,172  in VanEck Vietnam ETF on December 2, 2024 and sell it today you would earn a total of  32.00  from holding VanEck Vietnam ETF or generate 2.73% 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.  VanEck Vietnam ETF

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.

VanEck Vietnam ETF

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Vietnam ETF are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, VanEck Vietnam is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ProShares Ultra and VanEck Vietnam

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

The idea behind ProShares Ultra QQQ and VanEck Vietnam ETF 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..