Correlation Between ProShares UltraPro and Timothy Plan

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

Diversification Opportunities for ProShares UltraPro and Timothy Plan

0.78

Correlation Coefficient

ProShares UltraPro  Timothy Plan

Poor diversification

The 3 months correlation between ProShares and Timothy is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraPro SP500 and Timothy Plan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan 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 Timothy Plan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timothy Plan has no effect on the direction of ProShares UltraPro i.e., ProShares UltraPro and Timothy Plan go up and down completely randomly.

Pair Corralation between ProShares UltraPro and Timothy Plan

Given the investment horizon of 90 days ProShares UltraPro SP500 is expected to generate 2.97 times more return on investment than Timothy Plan. However, ProShares UltraPro is 2.97 times more volatile than Timothy Plan . It trades about 0.15 of its potential returns per unit of risk. Timothy Plan is currently generating about 0.04 per unit of risk. If you would invest  8,100  in ProShares UltraPro SP500 on September 16, 2024 and sell it today you would earn a total of  1,646  from holding ProShares UltraPro SP500 or generate 20.32% return on investment over 90 days.

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

ProShares UltraPro SP500  vs.  Timothy Plan

ProShares UltraPro SP500

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares UltraPro SP500 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, ProShares UltraPro displayed solid returns over the last few months and may actually be approaching a breakup point.

Timothy Plan

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Plan are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Timothy Plan is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ProShares UltraPro and Timothy Plan

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

The idea behind ProShares UltraPro SP500 and Timothy Plan 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 Stocks Directory module to find actively traded stocks across global markets.