Correlation Between ProShares Ultra and Alcoa Corp
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Alcoa Corp 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 Alcoa Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Ultra Bloomberg and Alcoa Corp, you can compare the effects of market volatilities on ProShares Ultra and Alcoa Corp 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 Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Alcoa Corp.
Diversification Opportunities for ProShares Ultra and Alcoa Corp
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ProShares and Alcoa is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Bloomberg and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp 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 Bloomberg are associated (or correlated) with Alcoa Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcoa Corp has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Alcoa Corp go up and down completely randomly.
Pair Corralation between ProShares Ultra and Alcoa Corp
Given the investment horizon of 90 days ProShares Ultra Bloomberg is expected to under-perform the Alcoa Corp. In addition to that, ProShares Ultra is 2.11 times more volatile than Alcoa Corp. It trades about -0.12 of its total potential returns per unit of risk. Alcoa Corp is currently generating about 0.02 per unit of volatility. If you would invest 3,385 in Alcoa Corp on January 19, 2024 and sell it today you would earn a total of 162.00 from holding Alcoa Corp or generate 4.79% 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 Bloomberg vs. Alcoa Corp
Performance |
Timeline |
ProShares Ultra Bloomberg |
Alcoa Corp |
ProShares Ultra and Alcoa Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ProShares Ultra and Alcoa Corp
The main advantage of trading using opposite ProShares Ultra and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, Alcoa Corp 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 Alcoa Corp will offset losses from the drop in Alcoa Corp's long position.ProShares Ultra vs. Drum Income Plus | ProShares Ultra vs. EA Series Trust | ProShares Ultra vs. Global X MLP | ProShares Ultra vs. ETRACS Quarterly Pay |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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