Correlation Between ProShares Ultra and Barclays Capital

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

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

Diversification Opportunities for ProShares Ultra and Barclays Capital

-0.51

Correlation Coefficient

ProShares Ultra  Barclays Capital

Excellent diversification

The 3 months correlation between ProShares and Barclays is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Technology and Barclays Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays Capital 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 Technology are associated (or correlated) with Barclays Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays Capital has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Barclays Capital go up and down completely randomly.

Pair Corralation between ProShares Ultra and Barclays Capital

If you would invest  6,351  in ProShares Ultra Technology on September 15, 2024 and sell it today you would earn a total of  1,034  from holding ProShares Ultra Technology or generate 16.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

ProShares Ultra Technology  vs.  Barclays Capital

ProShares Ultra Tech

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Technology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, ProShares Ultra displayed solid returns over the last few months and may actually be approaching a breakup point.

Barclays Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barclays Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Barclays Capital 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 Barclays Capital

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

The idea behind ProShares Ultra Technology and Barclays Capital 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.