Correlation Between ProShares Ultra and Hilton Small

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

Diversification Opportunities for ProShares Ultra and Hilton Small

-0.87

Correlation Coefficient

ProShares Ultra  Hilton Small

Pay attention - limited upside

The 3 months correlation between ProShares and Hilton is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Euro and Hilton Small MidCap Opportunit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Small MidCap 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 Hilton Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Small MidCap has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Hilton Small go up and down completely randomly.

Pair Corralation between ProShares Ultra and Hilton Small

Considering the 90-day investment horizon ProShares Ultra Euro is expected to under-perform the Hilton Small. But the etf apears to be less risky and, when comparing its historical volatility, ProShares Ultra Euro is 1.11 times less risky than Hilton Small. The etf trades about -0.13 of its potential returns per unit of risk. The Hilton Small MidCap Opportunity is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,485  in Hilton Small MidCap Opportunity on September 1, 2024 and sell it today you would earn a total of  242.00  from holding Hilton Small MidCap Opportunity or generate 9.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

ProShares Ultra Euro  vs.  Hilton Small MidCap Opportunit

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.

Hilton Small MidCap

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hilton Small MidCap Opportunity are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental indicators, Hilton Small may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with ProShares Ultra and Hilton Small

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

The idea behind ProShares Ultra Euro and Hilton Small MidCap Opportunity 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.