Correlation Between ProShares UltraPro and Nationwide

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

By analyzing existing cross correlation between ProShares UltraPro SP500 and Nationwide, you can compare the effects of market volatilities on ProShares UltraPro and Nationwide 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 UltraPro with a short position of Nationwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraPro and Nationwide.

Diversification Opportunities for ProShares UltraPro and Nationwide

0.25

Correlation Coefficient

ProShares UltraPro  Nationwide

Modest diversification

The 3 months correlation between ProShares and Nationwide is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraPro SP500 and Nationwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide and ProShares UltraPro 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 UltraPro SP500 are associated (or correlated) with Nationwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide has no effect on the direction of ProShares UltraPro i.e., ProShares UltraPro and Nationwide go up and down completely randomly.

Pair Corralation between ProShares UltraPro and Nationwide

If you would invest  6,042  in ProShares UltraPro SP500 on October 17, 2024 and sell it today you would earn a total of  2,594  from holding ProShares UltraPro SP500 or generate 42.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.44%
Values	Daily Returns

ProShares UltraPro SP500  vs.  Nationwide

ProShares UltraPro SP500

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares UltraPro SP500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, ProShares UltraPro is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Nationwide

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nationwide has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Nationwide is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with ProShares UltraPro and Nationwide

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

The idea behind ProShares UltraPro SP500 and Nationwide 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.