Correlation Between ProShares Ultra and KLNE

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

By analyzing existing cross correlation between ProShares Ultra Financials and KLNE, you can compare the effects of market volatilities on ProShares Ultra and KLNE 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 KLNE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and KLNE.

Diversification Opportunities for ProShares Ultra and KLNE

0.0

Correlation Coefficient

ProShares Ultra  KLNE

Pay attention - limited upside

The 3 months correlation between ProShares and KLNE is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Financials and KLNE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLNE 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 Financials are associated (or correlated) with KLNE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLNE has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and KLNE go up and down completely randomly.

Pair Corralation between ProShares Ultra and KLNE

If you would invest  8,499  in ProShares Ultra Financials on December 29, 2024 and sell it today you would earn a total of  194.00  from holding ProShares Ultra Financials or generate 2.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

ProShares Ultra Financials  vs.  KLNE

ProShares Ultra Fina

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Financials are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ProShares Ultra is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

KLNE

Risk-Adjusted Performance

Very Weak

Over the last 90 days KLNE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, KLNE 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 KLNE

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

The idea behind ProShares Ultra Financials and KLNE 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.