Correlation Between ProShares UltraPro and GraniteShares 15x

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

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

Diversification Opportunities for ProShares UltraPro and GraniteShares 15x

-0.03

Correlation Coefficient

ProShares UltraPro  GraniteShares 15x

Good diversification

The 3 months correlation between ProShares and GraniteShares is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraPro Short and GraniteShares 15x Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares 15x Short and ProShares UltraPro 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 UltraPro Short are associated (or correlated) with GraniteShares 15x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares 15x Short has no effect on the direction of ProShares UltraPro i.e., ProShares UltraPro and GraniteShares 15x go up and down completely randomly.

Pair Corralation between ProShares UltraPro and GraniteShares 15x

Given the investment horizon of 90 days ProShares UltraPro is expected to generate 2.89 times less return on investment than GraniteShares 15x. But when comparing it to its historical volatility, ProShares UltraPro Short is 3.1 times less risky than GraniteShares 15x. It trades about 0.05 of its potential returns per unit of risk. GraniteShares 15x Short is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  5,120  in GraniteShares 15x Short on November 28, 2024 and sell it today you would earn a total of  126.00  from holding GraniteShares 15x Short or generate 2.46% return on investment over 90 days.

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

ProShares UltraPro Short  vs.  GraniteShares 15x Short

ProShares UltraPro Short

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares UltraPro Short are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, ProShares UltraPro may actually be approaching a critical reversion point that can send shares even higher in March 2025.

GraniteShares 15x Short

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares 15x Short are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, GraniteShares 15x exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares UltraPro and GraniteShares 15x

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

The idea behind ProShares UltraPro Short and GraniteShares 15x 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.