Correlation Between IShares MSCI and ProShares Ultra
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and ProShares Ultra 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 IShares MSCI and ProShares Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI Emerging and ProShares Ultra Bloomberg, you can compare the effects of market volatilities on IShares MSCI and ProShares Ultra 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 IShares MSCI with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and ProShares Ultra.
Diversification Opportunities for IShares MSCI and ProShares Ultra
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IShares and ProShares is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Emerging and ProShares Ultra Bloomberg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Bloomberg and IShares MSCI 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 iShares MSCI Emerging are associated (or correlated) with ProShares Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra Bloomberg has no effect on the direction of IShares MSCI i.e., IShares MSCI and ProShares Ultra go up and down completely randomly.
Pair Corralation between IShares MSCI and ProShares Ultra
Considering the 90-day investment horizon iShares MSCI Emerging is expected to under-perform the ProShares Ultra. But the etf apears to be less risky and, when comparing its historical volatility, iShares MSCI Emerging is 6.72 times less risky than ProShares Ultra. The etf trades about -0.03 of its potential returns per unit of risk. The ProShares Ultra Bloomberg is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,352 in ProShares Ultra Bloomberg on January 26, 2024 and sell it today you would lose (5.00) from holding ProShares Ultra Bloomberg or give up 0.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
iShares MSCI Emerging vs. ProShares Ultra Bloomberg
Performance |
| Timeline |
| iShares MSCI Emerging |
| ProShares Ultra Bloomberg |
IShares MSCI and ProShares Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and ProShares Ultra
The main advantage of trading using opposite IShares MSCI and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, ProShares Ultra 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 ProShares Ultra will offset losses from the drop in ProShares Ultra's long position.The idea behind iShares MSCI Emerging and ProShares Ultra Bloomberg 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.| ProShares Ultra vs. ProShares Short SP500 | ProShares Ultra vs. ProShares Metaverse ETF | ProShares Ultra vs. ProShares VIX Mid Term | ProShares Ultra vs. ProShares VIX Short Term |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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