Correlation Between ProShares Ultra and WisdomTree High

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

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

Diversification Opportunities for ProShares Ultra and WisdomTree High

0.86

Correlation Coefficient

ProShares Ultra  WisdomTree High

Very poor diversification

The 3 months correlation between ProShares and WisdomTree is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Yen and WisdomTree High Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree High Dividend 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 Yen are associated (or correlated) with WisdomTree High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree High Dividend has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and WisdomTree High go up and down completely randomly.

Pair Corralation between ProShares Ultra and WisdomTree High

Considering the 90-day investment horizon ProShares Ultra is expected to generate 1.05 times less return on investment than WisdomTree High. In addition to that, ProShares Ultra is 1.49 times more volatile than WisdomTree High Dividend. It trades about 0.09 of its total potential returns per unit of risk. WisdomTree High Dividend is currently generating about 0.13 per unit of volatility. If you would invest  9,226  in WisdomTree High Dividend on December 29, 2024 and sell it today you would earn a total of  567.00  from holding WisdomTree High Dividend or generate 6.15% return on investment over 90 days.

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

ProShares Ultra Yen  vs.  WisdomTree High Dividend

ProShares Ultra Yen

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Yen are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, ProShares Ultra is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

WisdomTree High Dividend

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree High Dividend are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical indicators, WisdomTree High may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ProShares Ultra and WisdomTree High

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

The idea behind ProShares Ultra Yen and WisdomTree High Dividend 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.