Correlation Between UST Inc and ProShares Ultra

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

By analyzing existing cross correlation between ProShares Ultra 7 10 and ProShares Ultra 20, you can compare the effects of market volatilities on UST Inc and ProShares Ultra 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 UST Inc with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of UST Inc and ProShares Ultra.

Diversification Opportunities for UST Inc and ProShares Ultra

0.9

Correlation Coefficient

UST Inc  ProShares Ultra

Almost no diversification

The 3 months correlation between UST and ProShares is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra 7 10 and ProShares Ultra 20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra 20 and UST Inc 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 7 10 are associated (or correlated) with ProShares Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra 20 has no effect on the direction of UST Inc i.e., UST Inc and ProShares Ultra go up and down completely randomly.

Pair Corralation between UST Inc and ProShares Ultra

Considering the 90-day investment horizon ProShares Ultra 7 10 is expected to generate 0.53 times more return on investment than ProShares Ultra. However, ProShares Ultra 7 10 is 1.9 times less risky than ProShares Ultra. It trades about 0.11 of its potential returns per unit of risk. ProShares Ultra 20 is currently generating about 0.05 per unit of risk. If you would invest  4,041  in ProShares Ultra 7 10 on December 27, 2024 and sell it today you would earn a total of  231.00  from holding ProShares Ultra 7 10 or generate 5.72% return on investment over 90 days.

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

ProShares Ultra 7 10  vs.  ProShares Ultra 20

ProShares Ultra 7

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra 7 10 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, UST Inc is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

ProShares Ultra 20

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra 20 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, ProShares Ultra is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with UST Inc and ProShares Ultra

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

The idea behind ProShares Ultra 7 10 and ProShares Ultra 20 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.