Correlation Between ProShares Ultra and VanEck Video

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

Diversification Opportunities for ProShares Ultra and VanEck Video

-0.5

Correlation Coefficient

ProShares Ultra  VanEck Video

Very good diversification

The 3 months correlation between ProShares and VanEck is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Yen and VanEck Video Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Video Gaming 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 VanEck Video. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Video Gaming has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and VanEck Video go up and down completely randomly.

Pair Corralation between ProShares Ultra and VanEck Video

Considering the 90-day investment horizon ProShares Ultra Yen is expected to under-perform the VanEck Video. But the etf apears to be less risky and, when comparing its historical volatility, ProShares Ultra Yen is 1.47 times less risky than VanEck Video. The etf trades about -0.42 of its potential returns per unit of risk. The VanEck Video Gaming is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  8,882  in VanEck Video Gaming on October 7, 2024 and sell it today you would lose (337.00) from holding VanEck Video Gaming or give up 3.79% of portfolio value over 90 days.

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

ProShares Ultra Yen  vs.  VanEck Video Gaming

ProShares Ultra Yen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Ultra Yen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Etf's fundamental indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the ETF venture institutional investors.

VanEck Video Gaming

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Video Gaming are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, VanEck Video may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ProShares Ultra and VanEck Video

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

The idea behind ProShares Ultra Yen and VanEck Video Gaming 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.