Correlation Between ProShares Ultra and Dynamic Shares

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

Diversification Opportunities for ProShares Ultra and Dynamic Shares

0.0

Correlation Coefficient

ProShares Ultra  Dynamic Shares

Pay attention - limited upside

The 3 months correlation between ProShares and Dynamic is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Consumer and Dynamic Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamic Shares 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 Dynamic Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamic Shares has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Dynamic Shares go up and down completely randomly.

Pair Corralation between ProShares Ultra and Dynamic Shares

If you would invest  2,001  in ProShares Ultra Consumer on December 2, 2024 and sell it today you would lose (13.00) from holding ProShares Ultra Consumer or give up 0.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

ProShares Ultra Consumer  vs.  Dynamic Shares

ProShares Ultra Consumer

Risk-Adjusted Performance

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 rather sound technical and fundamental indicators, ProShares Ultra is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Dynamic Shares

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dynamic Shares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Dynamic Shares is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ProShares Ultra and Dynamic Shares

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

The idea behind ProShares Ultra Consumer and Dynamic Shares 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.