Correlation Between ProShares Ultra and VictoryShares Dividend

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

Diversification Opportunities for ProShares Ultra and VictoryShares Dividend

0.77

Correlation Coefficient

ProShares Ultra  VictoryShares Dividend

Poor diversification

The 3 months correlation between ProShares and VictoryShares is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Euro and VictoryShares Dividend Acceler in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares Dividend 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 VictoryShares Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares Dividend has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and VictoryShares Dividend go up and down completely randomly.

Pair Corralation between ProShares Ultra and VictoryShares Dividend

Considering the 90-day investment horizon ProShares Ultra Euro is expected to generate 1.46 times more return on investment than VictoryShares Dividend. However, ProShares Ultra is 1.46 times more volatile than VictoryShares Dividend Accelerator. It trades about -0.02 of its potential returns per unit of risk. VictoryShares Dividend Accelerator is currently generating about -0.09 per unit of risk. If you would invest  1,090  in ProShares Ultra Euro on November 28, 2024 and sell it today you would lose (17.00) from holding ProShares Ultra Euro or give up 1.56% of portfolio value over 90 days.

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

ProShares Ultra Euro  vs.  VictoryShares Dividend Acceler

ProShares Ultra Euro

Risk-Adjusted Performance

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

VictoryShares Dividend

Risk-Adjusted Performance

Very Weak

Over the last 90 days VictoryShares Dividend Accelerator has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, VictoryShares Dividend is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ProShares Ultra and VictoryShares Dividend

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

The idea behind ProShares Ultra Euro and VictoryShares Dividend Accelerator 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.