Correlation Between ProShares Ultra and FlexShares Quality

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

Diversification Opportunities for ProShares Ultra and FlexShares Quality

-0.59

Correlation Coefficient

ProShares Ultra  FlexShares Quality

Excellent diversification

The 3 months correlation between ProShares and FlexShares is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Yen and FlexShares Quality Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares Quality 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 FlexShares Quality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares Quality has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and FlexShares Quality go up and down completely randomly.

Pair Corralation between ProShares Ultra and FlexShares Quality

Considering the 90-day investment horizon ProShares Ultra Yen is expected to under-perform the FlexShares Quality. In addition to that, ProShares Ultra is 2.98 times more volatile than FlexShares Quality Dividend. It trades about -0.18 of its total potential returns per unit of risk. FlexShares Quality Dividend is currently generating about 0.11 per unit of volatility. If you would invest  7,031  in FlexShares Quality Dividend on September 17, 2024 and sell it today you would earn a total of  246.00  from holding FlexShares Quality Dividend or generate 3.5% return on investment over 90 days.

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

ProShares Ultra Yen  vs.  FlexShares Quality Dividend

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 uncertain 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.

FlexShares Quality

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FlexShares Quality Dividend are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, FlexShares Quality is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ProShares Ultra and FlexShares Quality

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

The idea behind ProShares Ultra Yen and FlexShares Quality 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.