Correlation Between ProShares Ultra and Wahed FTSE

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

Diversification Opportunities for ProShares Ultra and Wahed FTSE

-0.69

Correlation Coefficient

ProShares Ultra  Wahed FTSE

Excellent diversification

The 3 months correlation between ProShares and Wahed is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Yen and Wahed FTSE USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wahed FTSE USA 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 Wahed FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wahed FTSE USA has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Wahed FTSE go up and down completely randomly.

Pair Corralation between ProShares Ultra and Wahed FTSE

Considering the 90-day investment horizon ProShares Ultra Yen is expected to generate 1.8 times more return on investment than Wahed FTSE. However, ProShares Ultra is 1.8 times more volatile than Wahed FTSE USA. It trades about 0.07 of its potential returns per unit of risk. Wahed FTSE USA is currently generating about 0.08 per unit of risk. If you would invest  2,164  in ProShares Ultra Yen on August 30, 2024 and sell it today you would earn a total of  51.00  from holding ProShares Ultra Yen or generate 2.36% return on investment over 90 days.

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

ProShares Ultra Yen  vs.  Wahed FTSE USA

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 latest unsteady performance, the Etf's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Wahed FTSE USA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wahed FTSE USA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Wahed FTSE is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with ProShares Ultra and Wahed FTSE

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

The idea behind ProShares Ultra Yen and Wahed FTSE USA 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.