Correlation Between ProShares Ultra and Invesco Dynamic
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Invesco Dynamic 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 Invesco Dynamic 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 Invesco Dynamic Food, you can compare the effects of market volatilities on ProShares Ultra and Invesco Dynamic 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 Invesco Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Invesco Dynamic.
Diversification Opportunities for ProShares Ultra and Invesco Dynamic
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and Invesco is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Consumer and Invesco Dynamic Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Dynamic Food 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 Invesco Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Dynamic Food has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Invesco Dynamic go up and down completely randomly.
Pair Corralation between ProShares Ultra and Invesco Dynamic
Considering the 90-day investment horizon ProShares Ultra Consumer is expected to under-perform the Invesco Dynamic. In addition to that, ProShares Ultra is 1.3 times more volatile than Invesco Dynamic Food. It trades about -0.38 of its total potential returns per unit of risk. Invesco Dynamic Food is currently generating about -0.29 per unit of volatility. If you would invest 4,889 in Invesco Dynamic Food on September 24, 2024 and sell it today you would lose (227.00) from holding Invesco Dynamic Food or give up 4.64% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
ProShares Ultra Consumer vs. Invesco Dynamic Food
Performance |
Timeline |
ProShares Ultra Consumer |
Invesco Dynamic Food |
ProShares Ultra and Invesco Dynamic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ProShares Ultra and Invesco Dynamic
The main advantage of trading using opposite ProShares Ultra and Invesco Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, Invesco Dynamic 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 Invesco Dynamic will offset losses from the drop in Invesco Dynamic's long position.ProShares Ultra vs. Direxion Daily SP500 | ProShares Ultra vs. ProShares UltraPro SP500 | ProShares Ultra vs. Direxion Daily Technology | ProShares Ultra vs. MicroSectors FANG Index |
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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.
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