Correlation Between ProShares Ultra and Putnam Focused

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

Diversification Opportunities for ProShares Ultra and Putnam Focused

-0.65

Correlation Coefficient

ProShares Ultra  Putnam Focused

Excellent diversification

The 3 months correlation between ProShares and Putnam is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Yen and Putnam Focused Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Focused Large 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 Putnam Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Focused Large has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Putnam Focused go up and down completely randomly.

Pair Corralation between ProShares Ultra and Putnam Focused

Considering the 90-day investment horizon ProShares Ultra Yen is expected to under-perform the Putnam Focused. In addition to that, ProShares Ultra is 1.25 times more volatile than Putnam Focused Large. It trades about -0.07 of its total potential returns per unit of risk. Putnam Focused Large is currently generating about 0.13 per unit of volatility. If you would invest  1,982  in Putnam Focused Large on September 22, 2024 and sell it today you would earn a total of  1,938  from holding Putnam Focused Large or generate 97.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

ProShares Ultra Yen  vs.  Putnam Focused Large

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 January 2025. The latest mess may also be a sign of long-standing up-swing for the ETF venture institutional investors.

Putnam Focused Large

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Focused Large are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Putnam Focused may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ProShares Ultra and Putnam Focused

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

The idea behind ProShares Ultra Yen and Putnam Focused Large 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.