Correlation Between ProShares Ultra and TSJA

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

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

Diversification Opportunities for ProShares Ultra and TSJA

0.87

Correlation Coefficient

ProShares Ultra  TSJA

Very poor diversification

The 3 months correlation between ProShares and TSJA is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Consumer and TSJA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TSJA 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 Consumer are associated (or correlated) with TSJA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TSJA has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and TSJA go up and down completely randomly.

Pair Corralation between ProShares Ultra and TSJA

If you would invest  3,919  in ProShares Ultra Consumer on September 17, 2024 and sell it today you would earn a total of  1,805  from holding ProShares Ultra Consumer or generate 46.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	1.56%
Values	Daily Returns

ProShares Ultra Consumer  vs.  TSJA

ProShares Ultra Consumer

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Consumer are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, ProShares Ultra exhibited solid returns over the last few months and may actually be approaching a breakup point.

TSJA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TSJA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking indicators, TSJA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ProShares Ultra and TSJA

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

The idea behind ProShares Ultra Consumer and TSJA 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.