Correlation Between ProShares Ultra and FolioBeyond Rising

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

Diversification Opportunities for ProShares Ultra and FolioBeyond Rising

0.29

Correlation Coefficient

ProShares Ultra  FolioBeyond Rising

Modest diversification

The 3 months correlation between ProShares and FolioBeyond is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Semiconductors and FolioBeyond Rising Rates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FolioBeyond Rising Rates 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 FolioBeyond Rising. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FolioBeyond Rising Rates has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and FolioBeyond Rising go up and down completely randomly.

Pair Corralation between ProShares Ultra and FolioBeyond Rising

Considering the 90-day investment horizon ProShares Ultra Semiconductors is expected to generate 9.06 times more return on investment than FolioBeyond Rising. However, ProShares Ultra is 9.06 times more volatile than FolioBeyond Rising Rates. It trades about 0.11 of its potential returns per unit of risk. FolioBeyond Rising Rates is currently generating about 0.46 per unit of risk. If you would invest  6,687  in ProShares Ultra Semiconductors on October 7, 2024 and sell it today you would earn a total of  503.00  from holding ProShares Ultra Semiconductors or generate 7.52% return on investment over 90 days.

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

ProShares Ultra Semiconductors  vs.  FolioBeyond Rising Rates

ProShares Ultra Semi

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Semiconductors are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, ProShares Ultra exhibited solid returns over the last few months and may actually be approaching a breakup point.

FolioBeyond Rising Rates

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FolioBeyond Rising Rates are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, FolioBeyond Rising may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ProShares Ultra and FolioBeyond Rising

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

The idea behind ProShares Ultra Semiconductors and FolioBeyond Rising Rates 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.