Correlation Between GraniteShares 125x and ProShares UltraPro

Can any of the company-specific risk be diversified away by investing in both GraniteShares 125x and ProShares UltraPro 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 GraniteShares 125x and ProShares UltraPro into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GraniteShares 125x Long and ProShares UltraPro SP500, you can compare the effects of market volatilities on GraniteShares 125x and ProShares UltraPro 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 GraniteShares 125x with a short position of ProShares UltraPro. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares 125x and ProShares UltraPro.

Diversification Opportunities for GraniteShares 125x and ProShares UltraPro

0.69

Correlation Coefficient

GraniteShares 125x  ProShares UltraPro

Poor diversification

The 3 months correlation between GraniteShares and ProShares is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 125x Long and ProShares UltraPro SP500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraPro SP500 and GraniteShares 125x 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 GraniteShares 125x Long are associated (or correlated) with ProShares UltraPro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraPro SP500 has no effect on the direction of GraniteShares 125x i.e., GraniteShares 125x and ProShares UltraPro go up and down completely randomly.

Pair Corralation between GraniteShares 125x and ProShares UltraPro

Considering the 90-day investment horizon GraniteShares 125x Long is expected to generate 2.58 times more return on investment than ProShares UltraPro. However, GraniteShares 125x is 2.58 times more volatile than ProShares UltraPro SP500. It trades about 0.19 of its potential returns per unit of risk. ProShares UltraPro SP500 is currently generating about 0.06 per unit of risk. If you would invest  977.00  in GraniteShares 125x Long on October 3, 2024 and sell it today you would earn a total of  830.00  from holding GraniteShares 125x Long or generate 84.95% return on investment over 90 days.

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

GraniteShares 125x Long  vs.  ProShares UltraPro SP500

GraniteShares 125x Long

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares 125x Long are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, GraniteShares 125x disclosed solid returns over the last few months and may actually be approaching a breakup point.

ProShares UltraPro SP500

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares UltraPro SP500 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, ProShares UltraPro may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with GraniteShares 125x and ProShares UltraPro

The main advantage of trading using opposite GraniteShares 125x and ProShares UltraPro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares 125x position performs unexpectedly, ProShares UltraPro 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 ProShares UltraPro will offset losses from the drop in ProShares UltraPro's long position.

The idea behind GraniteShares 125x Long and ProShares UltraPro SP500 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.