Correlation Between ProShares Ultra and Invesco Active

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

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

Diversification Opportunities for ProShares Ultra and Invesco Active

-0.55

Correlation Coefficient

ProShares Ultra  Invesco Active

Excellent diversification

The 3 months correlation between ProShares and Invesco is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Semiconductors and Invesco Active Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Active Real 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 Semiconductors are associated (or correlated) with Invesco Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Active Real has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Invesco Active go up and down completely randomly.

Pair Corralation between ProShares Ultra and Invesco Active

Considering the 90-day investment horizon ProShares Ultra Semiconductors is expected to under-perform the Invesco Active. In addition to that, ProShares Ultra is 6.12 times more volatile than Invesco Active Real. It trades about -0.09 of its total potential returns per unit of risk. Invesco Active Real is currently generating about 0.05 per unit of volatility. If you would invest  8,896  in Invesco Active Real on December 29, 2024 and sell it today you would earn a total of  271.00  from holding Invesco Active Real or generate 3.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ProShares Ultra Semiconductors  vs.  Invesco Active Real

ProShares Ultra Semi

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Ultra Semiconductors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Invesco Active Real

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Active Real are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Invesco Active is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with ProShares Ultra and Invesco Active

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

The idea behind ProShares Ultra Semiconductors and Invesco Active Real 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.