Correlation Between ProShares Ultra and VanEck ETF

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

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

Diversification Opportunities for ProShares Ultra and VanEck ETF

-0.08

Correlation Coefficient

ProShares Ultra  VanEck ETF

Good diversification

The 3 months correlation between ProShares and VanEck is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Euro and VanEck ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck ETF Trust 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 Euro are associated (or correlated) with VanEck ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck ETF Trust has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and VanEck ETF go up and down completely randomly.

Pair Corralation between ProShares Ultra and VanEck ETF

Considering the 90-day investment horizon ProShares Ultra Euro is expected to under-perform the VanEck ETF. But the etf apears to be less risky and, when comparing its historical volatility, ProShares Ultra Euro is 1.15 times less risky than VanEck ETF. The etf trades about -0.02 of its potential returns per unit of risk. The VanEck ETF Trust is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,111  in VanEck ETF Trust on October 24, 2024 and sell it today you would earn a total of  1,052  from holding VanEck ETF Trust or generate 33.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.74%
Values	Daily Returns

ProShares Ultra Euro  vs.  VanEck ETF Trust

ProShares Ultra Euro

Risk-Adjusted Performance

0 of 100

Very Weak

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

VanEck ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ProShares Ultra and VanEck ETF

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

The idea behind ProShares Ultra Euro and VanEck ETF Trust 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 CEOs Directory module to screen CEOs from public companies around the world.