Correlation Between ProShares Ultra and WisdomTree Voya

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

Diversification Opportunities for ProShares Ultra and WisdomTree Voya

-0.44

Correlation Coefficient

ProShares Ultra  WisdomTree Voya

Very good diversification

The 3 months correlation between ProShares and WisdomTree is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Semiconductors and WisdomTree Voya Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Voya Yield 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 WisdomTree Voya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Voya Yield has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and WisdomTree Voya go up and down completely randomly.

Pair Corralation between ProShares Ultra and WisdomTree Voya

Considering the 90-day investment horizon ProShares Ultra Semiconductors is expected to generate 13.72 times more return on investment than WisdomTree Voya. However, ProShares Ultra is 13.72 times more volatile than WisdomTree Voya Yield. It trades about 0.11 of its potential returns per unit of risk. WisdomTree Voya Yield is currently generating about 0.04 per unit of risk. If you would invest  1,009  in ProShares Ultra Semiconductors on October 7, 2024 and sell it today you would earn a total of  6,181  from holding ProShares Ultra Semiconductors or generate 612.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.98%
Values	Daily Returns

ProShares Ultra Semiconductors  vs.  WisdomTree Voya Yield

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.

WisdomTree Voya Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WisdomTree Voya Yield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, WisdomTree Voya is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ProShares Ultra and WisdomTree Voya

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

The idea behind ProShares Ultra Semiconductors and WisdomTree Voya Yield 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.