Correlation Between ProShares Ultra and Fm 3

Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Fm 3 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 Fm 3 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 Fm 3 Year Investment, you can compare the effects of market volatilities on ProShares Ultra and Fm 3 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 Fm 3. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Fm 3.

Diversification Opportunities for ProShares Ultra and Fm 3

-0.54

Correlation Coefficient

ProShares Ultra  Fm 3

Excellent diversification

The 3 months correlation between ProShares and ZTRE is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Semiconductors and Fm 3 Year Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fm 3 Year 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 Fm 3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fm 3 Year has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Fm 3 go up and down completely randomly.

Pair Corralation between ProShares Ultra and Fm 3

Considering the 90-day investment horizon ProShares Ultra Semiconductors is expected to under-perform the Fm 3. In addition to that, ProShares Ultra is 52.5 times more volatile than Fm 3 Year Investment. It trades about -0.09 of its total potential returns per unit of risk. Fm 3 Year Investment is currently generating about 0.25 per unit of volatility. If you would invest  4,985  in Fm 3 Year Investment on December 28, 2024 and sell it today you would earn a total of  93.00  from holding Fm 3 Year Investment or generate 1.87% 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.  Fm 3 Year Investment

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.

Fm 3 Year

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fm 3 Year Investment are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Fm 3 is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ProShares Ultra and Fm 3

The main advantage of trading using opposite ProShares Ultra and Fm 3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, Fm 3 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 Fm 3 will offset losses from the drop in Fm 3's long position.

The idea behind ProShares Ultra Semiconductors and Fm 3 Year Investment 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.