Correlation Between ProShares Ultra and IShares Global

Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and IShares Global 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 IShares Global 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 iShares Global Consumer, you can compare the effects of market volatilities on ProShares Ultra and IShares Global 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 IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and IShares Global.

Diversification Opportunities for ProShares Ultra and IShares Global

0.8

Correlation Coefficient

ProShares Ultra  IShares Global

Very poor diversification

The 3 months correlation between ProShares and IShares is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Consumer and iShares Global Consumer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Consumer 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 IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Consumer has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and IShares Global go up and down completely randomly.

Pair Corralation between ProShares Ultra and IShares Global

Considering the 90-day investment horizon ProShares Ultra Consumer is expected to generate 2.17 times more return on investment than IShares Global. However, ProShares Ultra is 2.17 times more volatile than iShares Global Consumer. It trades about 0.04 of its potential returns per unit of risk. iShares Global Consumer is currently generating about 0.03 per unit of risk. If you would invest  1,524  in ProShares Ultra Consumer on September 20, 2024 and sell it today you would earn a total of  345.00  from holding ProShares Ultra Consumer or generate 22.64% return on investment over 90 days.

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

ProShares Ultra Consumer  vs.  iShares Global Consumer

ProShares Ultra Consumer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Ultra Consumer has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

iShares Global Consumer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Global Consumer has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, IShares Global is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with ProShares Ultra and IShares Global

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

The idea behind ProShares Ultra Consumer and iShares Global Consumer 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.

Check out your portfolio center.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.