Correlation Between ProShares Ultra and United States

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

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

Diversification Opportunities for ProShares Ultra and United States

0.97

Correlation Coefficient

ProShares Ultra  United States

Almost no diversification

The 3 months correlation between ProShares and United is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Bloomberg and United States Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Oil 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 Bloomberg are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Oil has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and United States go up and down completely randomly.

Pair Corralation between ProShares Ultra and United States

Considering the 90-day investment horizon ProShares Ultra Bloomberg is expected to under-perform the United States. In addition to that, ProShares Ultra is 1.58 times more volatile than United States Oil. It trades about -0.02 of its total potential returns per unit of risk. United States Oil is currently generating about 0.01 per unit of volatility. If you would invest  7,482  in United States Oil on December 29, 2024 and sell it today you would lose (5.00) from holding United States Oil or give up 0.07% of portfolio value over 90 days.

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

ProShares Ultra Bloomberg  vs.  United States Oil

ProShares Ultra Bloomberg

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Ultra Bloomberg has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, ProShares Ultra is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

United States Oil

Risk-Adjusted Performance

Very Weak

Over the last 90 days United States Oil has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, United States is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ProShares Ultra and United States

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

The idea behind ProShares Ultra Bloomberg and United States Oil 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.