Correlation Between ProShares Ultra and United States

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

Diversification Opportunities for ProShares Ultra and United States

-0.31

Correlation Coefficient

ProShares Ultra  United States

Very good diversification

The 3 months correlation between ProShares and United is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Semiconductors and United States Natural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Natural 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Natural has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and United States go up and down completely randomly.

Pair Corralation between ProShares Ultra and United States

Considering the 90-day investment horizon ProShares Ultra Semiconductors is expected to generate 1.29 times more return on investment than United States. However, ProShares Ultra is 1.29 times more volatile than United States Natural. It trades about 0.03 of its potential returns per unit of risk. United States Natural is currently generating about 0.03 per unit of risk. If you would invest  5,919  in ProShares Ultra Semiconductors on August 30, 2024 and sell it today you would earn a total of  158.00  from holding ProShares Ultra Semiconductors or generate 2.67% return on investment over 90 days.

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

ProShares Ultra Semiconductors  vs.  United States Natural

ProShares Ultra Semi

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Semiconductors are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, ProShares Ultra may actually be approaching a critical reversion point that can send shares even higher in December 2024.

United States Natural

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in United States Natural are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, United States may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with ProShares Ultra and United States

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

The idea behind ProShares Ultra Semiconductors and United States Natural 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.