Correlation Between ProShares Ultra and Advisor Managed

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

By analyzing existing cross correlation between ProShares Ultra SP500 and Advisor Managed Portfolios, you can compare the effects of market volatilities on ProShares Ultra and Advisor Managed 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 Advisor Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Advisor Managed.

Diversification Opportunities for ProShares Ultra and Advisor Managed

0.99

Correlation Coefficient

ProShares Ultra  Advisor Managed

No risk reduction

The 3 months correlation between ProShares and Advisor is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra SP500 and Advisor Managed Portfolios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advisor Managed Port 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 SP500 are associated (or correlated) with Advisor Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advisor Managed Port has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Advisor Managed go up and down completely randomly.

Pair Corralation between ProShares Ultra and Advisor Managed

Considering the 90-day investment horizon ProShares Ultra SP500 is expected to generate 1.03 times more return on investment than Advisor Managed. However, ProShares Ultra is 1.03 times more volatile than Advisor Managed Portfolios. It trades about 0.19 of its potential returns per unit of risk. Advisor Managed Portfolios is currently generating about 0.17 per unit of risk. If you would invest  8,341  in ProShares Ultra SP500 on September 2, 2024 and sell it today you would earn a total of  1,466  from holding ProShares Ultra SP500 or generate 17.58% return on investment over 90 days.

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

ProShares Ultra SP500  vs.  Advisor Managed Portfolios

ProShares Ultra SP500

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra SP500 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, ProShares Ultra displayed solid returns over the last few months and may actually be approaching a breakup point.

Advisor Managed Port

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Advisor Managed Portfolios are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Advisor Managed disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares Ultra and Advisor Managed

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

The idea behind ProShares Ultra SP500 and Advisor Managed Portfolios 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.