Correlation Between ProShares Ultra and UBS

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

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

Diversification Opportunities for ProShares Ultra and UBS

0.0

Correlation Coefficient

ProShares Ultra  UBS

Pay attention - limited upside

The 3 months correlation between ProShares and UBS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra FTSE and UBS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS 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 FTSE are associated (or correlated) with UBS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and UBS go up and down completely randomly.

Pair Corralation between ProShares Ultra and UBS

If you would invest  5,462  in ProShares Ultra FTSE on December 28, 2024 and sell it today you would earn a total of  1,255  from holding ProShares Ultra FTSE or generate 22.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

ProShares Ultra FTSE  vs.  UBS

ProShares Ultra FTSE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra FTSE are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, ProShares Ultra showed solid returns over the last few months and may actually be approaching a breakup point.

UBS

Risk-Adjusted Performance

Very Weak

Over the last 90 days UBS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, UBS 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 UBS

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

The idea behind ProShares Ultra FTSE and UBS 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.