Correlation Between MicroSectorsTM Oil and ProShares Ultra
Can any of the company-specific risk be diversified away by investing in both MicroSectorsTM Oil 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 MicroSectorsTM Oil and ProShares Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectorsTM Oil Gas and ProShares Ultra Silver, you can compare the effects of market volatilities on MicroSectorsTM Oil 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 MicroSectorsTM Oil with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectorsTM Oil and ProShares Ultra.
Diversification Opportunities for MicroSectorsTM Oil and ProShares Ultra
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MicroSectorsTM and ProShares is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectorsTM Oil Gas and ProShares Ultra Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Silver and MicroSectorsTM Oil 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 MicroSectorsTM Oil Gas 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 Silver has no effect on the direction of MicroSectorsTM Oil i.e., MicroSectorsTM Oil and ProShares Ultra go up and down completely randomly.
Pair Corralation between MicroSectorsTM Oil and ProShares Ultra
Given the investment horizon of 90 days MicroSectorsTM Oil is expected to generate 6.93 times less return on investment than ProShares Ultra. But when comparing it to its historical volatility, MicroSectorsTM Oil Gas is 1.57 times less risky than ProShares Ultra. It trades about 0.06 of its potential returns per unit of risk. ProShares Ultra Silver is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 3,026 in ProShares Ultra Silver on January 20, 2024 and sell it today you would earn a total of 661.00 from holding ProShares Ultra Silver or generate 21.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 91.3% |
| Values | Daily Returns |
MicroSectorsTM Oil Gas vs. ProShares Ultra Silver
Performance |
| Timeline |
| MicroSectorsTM Oil Gas |
| ProShares Ultra Silver |
MicroSectorsTM Oil and ProShares Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectorsTM Oil and ProShares Ultra
The main advantage of trading using opposite MicroSectorsTM Oil and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectorsTM Oil 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.| MicroSectorsTM Oil vs. MicroSectorsTM Oil Gas | MicroSectorsTM Oil vs. UBS ETRACS | MicroSectorsTM Oil vs. MicroSectors Big Oil | MicroSectorsTM Oil vs. Drum Income Plus |
| ProShares Ultra vs. ProShares Ultra Gold | ProShares Ultra vs. ProShares UltraShort Silver | ProShares Ultra vs. DB Gold Double | ProShares Ultra vs. ProShares UltraShort Gold |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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